MBW Views is a series of exclusive op/eds from eminent music industry people… with something to say. The following comes from Laurence Oxenbury, Director of International, PPL.
PPL licenses recorded music in the UK when it is played in public or broadcast and ensures that revenue flows back to its members. These include independent and major record companies, together with performers ranging from emerging musicians to globally renowned artists.
In 2023, PPL’s revenue was £283.5 million, the highest in the organisation’s 90-year history, and it paid close to 165,000 performers and recording rights-holders.
Sound recording performance rights, also known as neighbouring rights income, reached $2.7 billion in 2023, representing 9.5% of the global recorded music market.
Back at the turn of the century that total was just $0.6 billion, or 2.7%. It’s a strong growth rate, but one with a huge amount of further potential still baked into it.
While ‘Old Europe’ has traditionally been the hub of these types of revenue streams – namely, rights from TV and radio broadcasting; aligned digital uses such as simulcasting, webcasting and satellite radio; and sound recordings played in shops, bars, restaurants, nightclubs and other public venues – a significant shift is underway, with collections from emerging economies with young, and quickly growing, populations starting to flex their potential. If effectively managed in the medium term, this shift could pave the way for substantial industry growth.
ALL POINTS EAST
With a massive population of over 281 million, Indonesia holds a pivotal role in the sound recording industry. As the world’s fourth most populous country and the largest economy in Southeast Asia, it presents significant growth potential. Despite the current challenges posed by regulatory intervention and a complex network of organisations, the domestic collection body, SELMI, has a robust plan for improvements in the Indonesian market, a prospect that should keep stakeholders optimistic about the region’s future.
Likewise, the neighbouring country of the Philippines, with a population of over 115 million, sits securely within the top 50 economies globally and is forecast to enter the top 20 by 2050. It too has been plagued by challenges between conflicting organisations. Still, a collaborative effort between international trade bodies, local companies and global collective management organisations (CMOs) in recent years led to the creation of the Philippines Recorded Music Rights, a CMO licensed by the Philippines Government which has been growing its market presence and licensing capability.
Singapore has long been considered a developed and sophisticated music market. Yet sound recording performance rights were only introduced in November 2021, partly due to the EU-Singapore trade agreement. Currently, rights only exist for sound recording producers, but the local organisation, Music Rights Society Singapore (MRSS), has grown rapidly. Collections exceeded $5 million in 2023, and the projections are for further accelerated growth, as MRSS takes full advantage of a well-developed usage market.
Asia’s largest market, China, is now the fifth-largest music market globally. After many years of discussion, neighbouring rights for record companies were finally introduced in China in June 2021.The local CMO, CAVCA, which has nearly two decades of managing film rights in karaoke, is diligently establishing an appropriate value for recorded music rights and enforcing those rights against users. It is not an easy job and, as with many developing markets, regulatory support and extensive customer outreach and education are needed.
ALL EYES ON AFRICA
The global music industry has increasingly been turning its gaze to Africa for creativity, with a plethora of global superstars emerging from the continent. But the region’s economics and demographics mean that the music consumption story is one which warrants just as much interest. In 2023, Sub-Saharan Africa had the fastest growth of any region, with revenues for recorded music climbing by 24.7%, according to the IFPI.
Last month, the annual General Assembly for SCAPR members, the global trade organisation for performers’ neighbouring rights organisations, was held in Africa for the first time, with 130 attendees meeting in Johannesburg. While SAMPRA in South Africa has led the charge from a neighbouring rights perspective, collecting over $13 million in 2023, a recent report from Ieva Oxenbury and Rob Hooijer, two notable neighbouring rights and local experts, highlighted some of the challenges faced across 12 African countries in following SAMPRA’s lead.
Alongside patchy licensing infrastructures and a historic lack of the music data needed to drive accurate distributions of local content, heavy-handed regulatory regimes and significant knowledge gaps amongst both music users and rights-holders are also hampering progress in driving value from the explosion of recorded music use.
Despite this, there is increasing optimism. The Angolan rights management organisations have created a technically sophisticated one-stop shop licensing body for all rights, with similar set-ups in Senegal and Cote D’Ivoire. There is also a growing understanding of the need for effective neighbouring rights collection and administration across the continent as a driver for further economic growth and creativity, and a backstop income for precarious cultural workers – especially those who are not contracted artists.
DATA SINGS TOO
There is no one-size-fits-all approach to the structure of neighbouring rights organisations around the world, from government-licensed businesses to private companies, multi-right organisations to societies that work for specific
rights-holders or performers.
But what they all need to function effectively is sufficient data on sound recordings and performances. This is not a new challenge; the data from last century, particularly on performances, is difficult in every market.
Thankfully, pragmatic best-practice solutions are available, balancing accurate metadata with historical knowledge to ensure equity in payments. Without any major fanfare, CMOs around the world have been focused on improving data and systems sharing to drive operational efficiency of their business and the accuracy of their distributions.
For example, several CMOs across Asia, including in Singapore, Thailand, India and Indonesia, have collaborated with the IFPI on creating a single distribution platform, SoundSys, built by the Spanish music technology company BMAT.
SoundSys ensures that each CMO has standardised operating and distribution procedures that are aligned with global best practices, and enables payments to rights-holders, both domestic and international. SoundSys has subsequently been rolled out to other Asian markets and is now also used by sound recording CMOs in Latin America.
Elsewhere, there is the Repertoire Data Exchange, or RDx, a music data exchange from IFPI and WIN, built and operated by PPL. It enables record companies and CMOs to submit and access recording data via a single point, to help improve the accuracy and efficiency of CMO revenue distributions to rights-holders worldwide. Data for over 11.5 million individual sound recordings has been submitted into RDx, and there are now nine data sources feeding into it, with 10 more in the pipeline to onboard.
Similarly, SCAPR has developed the Virtual Recordings Database (VRDB), a central repository of performer line-ups on sound recording and aggregated usage information, which allows performer CMOs access to the data they need for faster and more accurate distributions, in turn increasing volume of performers benefiting from neighbouring rights income.
Both from a regulatory and technology perspective, the future growth of neighbouring rights looks inevitable. There is no doubt that it remains a complex space, with local knowledge and expertise often proving the unlock in getting effective structures and systems in place. But, for those of us who have been working in the sector for many years, it is exciting to witness the pace of growth picking up. No longer the sleepy neighbour, these rights are becoming a significant and vital revenue stream for recording rights-holders today and into the future.
Music Business Worldwide