In MBW’s Stat Of The Week, we spotlight a statistic that the entire world’s music industry should be aware of. Cinq Music Group, a technology-driven record label, distribution, and rights management organisation, supports Stat of the Week.
The year 2022 was a significant one for American music publishing organisations (as well as their songwriters, investors, and investors).
Pubcos gained from increased streaming activity in the US, the largest music market in the world, but many of them also welcomed a significant increase in performance royalties as a result of the opening of public spaces in other international regions after Covid lockdowns.
Of course, there was also that other significant event last summer when the US Copyright Royalty Board (CRB) rejected arguments from platforms like Spotify opposing a proposed rate increase for publishers from American streaming services.
The headline USD mechanical royalty rate paid to publishers by music streaming services during the years 2018–2022, as a result of the CRB’s judgement (which concluded its ‘CRB III’ procedures), retroactively increased to a 15.1% share (see below) of the annual income of those streaming services.
To put it in plainer English: Digital services were required to pay music publishers in full for the retrospective use of their music during the five-year period from 2018 to 2022.
The National Music Publishers’ Association (NMPA), which represents publishers and songwriters in CRB proceedings, then announced in August of last year that it had reached an agreement with DSPs for the following five years (2023–2027), during which a new headline royalty rate of 15.35% would be phased in.
In terms of the NMPA, on Wednesday, June 14, the US trade organisation, led by President and CEO David Israelite, had its Annual Meeting for 2023 in New York and offered its music publisher members with a range of relevant resources, including the slideshows below.
One significant statistic for the music industry was included in the information: The total trade income of US-based music publishers in calendar 2022 was USD $5.605 billion, an increase of 19.25% year over year.
To better understand the recent expansion of the US music publishing market, consider that the $5.605 billion figure was more than twice as large as the $2.65 billion in yearly revenues recorded by the US publishing market in 2016.
The official USD $5.605 billion revenue figure for 2022 may actually increase, as David Israelite noted at the NMPA meeting last week, because it excludes the money that music publishers are still owed retroactively (for that 2018–2022) by digital services under the terms of CRB III.
Israelite affirmed that the NMPA’s revenue projection for 2022 was based on data provided by its own members, who he claimed constituted 95.7% of all music publishing rights holders doing business in the United States, making them “the highest representation of any industry for any trade association [operating in] Washington DC.”
When you compare that USD $5.605 billion income amount to what the US record industry generated in 2022, according to figures from the RIAA, the NMPA’s counterpart for recorded music, the figure becomes even more fascinating.
It’s important to note that the NMPA only discloses wholesale revenue information (i.e., trade revenues reported by its members).
The amount of money that goes to distributors, record labels, and artists must be compared to in order to make a like-for-like comparison; this is in contrast to the RIAA’s “retail” figures, which reflect the money that customers pay to streaming services, record stores, etc.
Here goes
The $10.3 billion generated by owners of recorded music rights, as reported by the RIAA (to one decimal place), was much greater than the $5.6 billion generated by US music publishers in 2022, as you can see above.
An especially intriguing aspect of this is how the NMPA’s (i.e., publishers’) number compares to the record industry’s (i.e., RIAA’s) total.
The $5.6 billion amount for the NMPA in 2022 was equal to 54.4% of the RIAA’s comparable figure.
For the first time since 2020, the NMPA’s income number ($4.1 billion vs. $8.0 billion) exceeded the RIAA’s wholesale total by more than 50%.
But have a look at what happens when we contrast the real monetary growth in annual wholesale revenues of both the US publishing sector and the US record industry in 2022:
The US music publishing industry increased by a substantially higher actual amount last year than the US record industry, which comes as a bit of a shock when you consider wholesale annual revenue growth.
In fact, publishing grew by $0.9 billion ($900 million) more than the record industry did, which grew by $0.5 billion ($500 million).
(To show why 2022 was such a unique year, note the reversal in the blue and red bars’ sizes above.)
What led to music publishing’s notably strong growth in comparison to the US record industry in 2022?
One factor was the CRB III boost (remember, there was a lot of money involved?). Another factor to consider was the increase in performance royalties following the Covid scandal.
Indeed, Covid lockdowns in 2020 and 2021 would have naturally suppressed potential growth, resulting in a shortage of domestic and international performance income from bars, clubs, restaurants, stores, and other venues.
As David Israelite revealed this week, private/for-profit PROs like SESAC and Global Music Rights also saw record years in 2022. In contrast, organisations like ASCAP and BMI had record years in 2022.
It’s interesting to note that despite this PRO rise, performance royalties only accounted for 48.25% of the NMPA’s $5.605 billion in total revenue in 2022, the first time in history (see below).
The 2022 NMPA revenue haul saw considerable year-over-year rise in sync revenue to more than a quarter of wholesale yearly music publishing industry turnover (26.07%), in addition to a CRB-driven increase in mechanical royalties (20.28%).
The Annual Meeting for 2023 of the NMPA, led by President and CEO David Israelite, took place on Wednesday, June 14 in New York. During the event, the US trade organization provided its music publisher members with a variety of valuable resources.
David Israelite stated last week that “a lot of the work the NMPA has done” in requiring/encouraging new internet platforms to obtain music publishing catalogue licences “has created new revenue streams [in’sync’] that we now enjoy.”
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