The music industry has been facing a lot of challenges in recent years, with declining record sales and the rise of digital piracy. However, there are some areas of the industry that are still thriving, including the publishing sector. According to a recent report by the American Society of Composers, Authors, and Publishers (ASCAP), performance rights royalty collections have been booming, with record revenues and royalty payments in the past year.
ASCAP reported revenues of $785 million, a gain of 5 percent over the previous year, and royalty payments of $680 million, an increase of 5.3 percent. These are both records, according to an announcement issued by the organization. The report attributed the growth to heavy licensing growth from existing and new music channels, as well as strong improvements in operational efficiency. ASCAP also pointed to an all-time low operating expense ratio of 12.0 percent.
Both US and foreign royalties showed strong gains, with domestic distributions totaling over $486 million, up 6.3 percent, and international distributions reaching $211.7 million. ASCAP also noted growth from recently-licensed deals with terrestrial and satellite radio providers. Total radio revenues increased 11 percent to $22 million, with terrestrial contributing about two-thirds of that growth. The group also projected revenue growth from a new, five-year licensing deal with XM Satellite Radio, a deal that includes percentages from both advertising and subscriber revenues.
In addition, ASCAP gained $13.8 million from internet-based and wireless licensing agreements, a gain of 70 percent. The group is planning aggressive moves ahead, including a recent push to extract performance royalties from paid downloads. Predictably, that has drawn the ire of online music providers, represented by trade body DiMA.
The ASCAP report highlights the importance of performance rights royalty collections to the music industry. These royalties are earned by songwriters, composers, and publishers for the public performance of their music, whether it is played on the radio, in a live venue, or on TV. ASCAP is one of several organizations that collect and distribute these royalties to their members. Other organizations include BMI (Broadcast Music, Inc.), SESAC (Society of European Stage Authors and Composers), and GEMA (Society for Musical Performing and Mechanical Reproduction Rights).
Performance rights royalties have become increasingly important as traditional sources of revenue for the music industry, such as record sales, have declined. In fact, performance rights royalties have become the fastest-growing revenue stream for the music industry in recent years. According to a report by PwC, global performance rights revenue is expected to surpass $10 billion by 2023, up from $8.6 billion in 2018.
One reason for the growth of performance rights royalties is the increasing popularity of streaming services like Spotify and Apple Music. These services pay performance royalties for the songs they stream, and as more people turn to streaming for their music, the revenue generated by these royalties is growing. In addition, performance rights royalties are becoming more important for artists as they seek to diversify their income streams and rely less on record sales.
Overall, the ASCAP report is good news for the music industry, as it shows that there are still areas of growth and opportunity despite the challenges the industry faces. Performance rights royalty collections are an important part of the music business, and as the industry continues to evolve, they will likely become even more important in the years to come.
