Even amid the streaming-driven spectacular recovery of the music business, rights management organizations are thriving. Music rights collections reached €10.83 billion ($11.4 billion) in 2022, according to CISAC, the trade organization of collective management societies, a historic high that represents 28% growth over 2021 revenue, partly because the live business is recovering so fast.
“It’s an excellent result,” CISAC director general Gadi Oron told Billboard. “It’s record-breaking in terms of collections, since we exceeded €12 billion” — CISAC member societies racked up €12.1 billion ($12.7 billion) in revenue, counting audiovisual, literary and other collections — “and it’s record-breaking in terms of year-on-year growth.”
This arguably undervalues the rights business, because it only counts money that goes through rights management organizations — both collective management societies and private businesses that license the same rights — and not revenue from direct deals with publishers. In the U.S., the world’s biggest market, for example, it counts public performance royalties but not the mechanical royalties handled by the Mechanical Licensing Collective. Add in that money and, although an apples-to-Apple Music accounting would get complicated, the total is almost certainly more than half of the $26.2 billion global recorded music revenue that IFPI reported for the same year. That’s a lot of money flowing through organizations with unpronounceable initials.
At first glance, it looks like revenue from collections is growing much slower than those from recordings — music rights collections are up 31% since 2018, while recording revenue is up nearly 50%. But that may not paint a full picture. Most of the growth in the recording business is tied to streaming — much of its future growth will come from streaming in the developing world. The same is true of collections, except that digital only became the biggest source of revenue this year, representing 38% of the total. Most other sources of collections revenue are growing slower, except for live, which was whipsawed by the pandemic and will only recover fully this year. And since 2018, digital collections grew by150% while global digital revenue grew by just under 100%.
The current pace of growth is unsustainable, since it includes the once-in-a-century recovery of revenue collected from live performance, which grew 185.7%. But digital collections alone grew 33.5%, and that revenue will make up a larger share of total revenue in the coming years, which implies faster growth overall. In five years, “the one thing I’m certain of is that digital will become more than a third of the pie,” Oron says. It could even be half — presumably without much erosion in live revenue and other sources of income.
As in the recorded music business, the larger amount of that money will come from countries that thus far have had small, or even negligible, music industries. The countries that brought in the most revenue in 2022 aren’t so different from the usual — the U.S. in the lead with €2.6 billion ($2.7 billion, up 30.5%), then France with €1.3 billion ($1.3 billion, up 39.3%), the U.K. with €1 billion ($1 billion, up 24.3%), Germany with €903 million ($951 million, up 17.9%) and Japan with €848 million ($893 million, up 10.1% in local currency). That’s similar to the biggest markets for recorded music, only France does better in collections, comparatively, while Japan fares a bit worse. (Europe still accounts for 51% of collections revenue, with another 27% coming from the U.S. and Canada.) “The countries in the top 10 have always been the biggest collectors,” Oron says.
The balance of power will tilt even more toward some of these markets, however, as the biggest and most important European societies — SACEM in France, PRS for the U.K. and GEMA in Germany — sign more affiliates to collect more digital revenue. Those societies now have the repertoire, and thus the leverage, to negotiate better deals with big platforms that cover much of the globe. Some of the growth in collections is fueled by the fact that “many societies renegotiated,” Oron says, and he predicts that “hubs” will become more popular over the next decade.
At the same time, the fastest growth is coming from developing markets that are almost entirely digital: Vietnam, India, Indonesia and Thailand. Collections in Latin America grew almost 65% in 2022. As in recorded music, these markets never accounted for much revenue of any kind, so their emergence is almost entirely pure growth. And since not all of the countries with fast-growing music businesses have collecting societies that function well, rights organizations could face a stark choice: Reform them or work with them in order to collect a range of royalties; or try to license streaming services that operate in those markets from outside the countries to ensure that the fastest-growing stream of revenue will flow more directly to songwriters and publishers?
One of the questions around the future of collections is artificial intelligence, the industry’s favorite savior or bogeyman, depending on the day, and the CISAC report devotes most of two pages to it, in the form of forewords by Oron and CISAC President Björn Ulvaeus. “There is no question that the way we address it now will have a huge bearing on collections in the future,” writes Oron, who calls the technology an “existential issue” that presents both “threats” and “amazing opportunities.”
Ulvaeus takes the same tone. “Fresh from COVID and the economic squeeze, what we now face is a potentially far more serious, existential challenge — that of Artificial intelligence,” he writes. “I think of it as having the power to extend the human mind and potentially create wonderful art. But it brings dangers too, and without hard rules protecting human creators it could also threaten their livelihoods on a huge scale.”
Both Oron and Ulvaeus say CISAC intends to play a leading role in making sure AI helps, rather than hurts, creators. Collecting societies could be an important part of any such solution, given the amount of material that would need to be licensed. Right now, “you don’t know what you’re licensing and to whom,” Oron says. “The most important issue is transparency.”