Transcript Economics of music publishing: the law and the market

Economics of music publishing: the
law and the market
Ruth Towse
Professor of Economics of Creative Industries
CIPPM, Bournemouth University and
CREATe Fellow in Cultural Economics (University of Glasgow)
[email protected]
Copyright and business models in UK
music publishing project
•
Historical analysis of the effect of changes in copyright law on business models.
•
Music publishing an old established industry: survived effect of disruptive
exogenous technological change. Little endogenous tech. change; entrepreneurial
adaptation in face of changing market.
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Music publisher – ‘classic’ creative industry intermediary. Contracts with composer
to get works to market – edits, prints, publishes music. Finds performers, recording
contracts etc
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Business model - revenues based on sales of sheet music until shift to rights
management in early 20th C. Buy-out contract with composer until 1920s.
•
Disruptive effect on sales model of mass media technologies – sound recording,
radio. Copyright law responded - lags not leads.
Markets for published music: sales and
hires
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Markets for music until 19th C. were home, Church, theatre. Public concerts and
music hall of ‘serious’ and popular music by mid 19th C. Publishers plugged new
works – hired performers to repeatedly perform them in music halls as advertising.
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Home performance required printed music: sales. Theatrical music printed after
performances – popular tunes published for sale to public. As market grew,
orchestral parts printed for hire, also arrangements.
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Heyday of sales was end of 19th C. Genres were religious, instrumental (piano,
brass band, orchestral ), choral and songs. Songs biggest market. Soldiers of the
Queen sold 238,000 in 1898. Sullivan’s Lost Chord sold ½ million 1870-1902.
Hit=sales over 200,000.
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Piracy of printed music was rife but market grew despite it. Copyright law only
effectively enforceable with 1906 Act. As the market grew, publishers became
more specialised by genre etc.
Copyright in musical compositions
• Statute of Anne not deemed to include musical
composition.
• Copyright for composer from 1777 court case (Bach v
Longman). Composer assigned rights to music publisher for
reproduction and publication.
• Performing right for non-dramatic music established in
1844 but ignored by publishers until PRS founded in 1914.
• Mechanical right established in 1911 Copyright Act. MCPS
first British collecting society. ‘Synchronisation’ right relates
to music coupled with moving image.
Business models and contracts in
music publishing
• Performing rights and mechanical rights offered new sources of revenues
to both composers/songwriters and publishers. These rights required
collective management.
• Role of publisher switched to rights management. Changed contracts:
contract with songwriter part of business model.
• Traditional contract with composer was buy-out of all rights for fee;
publisher bore all risk and cost of exploitation.
• Performing right ignored as clashed with plugging model
• Rights management model -> royalty contract. Composer gets % of
revenues, shares risk. Royalty contracts universal only since 1920s.
Evolution of contract types and royalty hsares.
Switch to rights management
• PRS set up by music publishers in 1914 but major ones did not join
(Boosey&Co.in 1927. Novello in 1934). Inhibited blanket licensing
and bargaining power to set rate. (Similar problem today with
individual and transactional licensing).
• BBC signed up early on: monopsony broadcaster and biggest user of
published and recorded music. BBC monopoly lasted until 1950s
then commercial market grew.
• BBC banned plugging (even of announcing titles at one stage!).
Altered publishers’ business model.
• Public performance of music has increased hugely with ever more
markets at home and abroad. Synch rights increasingly valuable.
Growth of PRS income
Table 1 PRS Income 1930-2010 (£000) with percentage of broadcasting
Year
Total gross income
2014 value
Broadcasting
1920
23
918
0
1930
173
10,101
35%
1940
619
30950
54%
1950
1,495
43,756
43%
1960
3,296
67,800
44%
1970
9,127
126,195
28%
1980
39,342
150,684
42%
1990
123,297
250,321
34%
2000
236,830
356,000
35%
699,980
(includes
28% online)
2010
611,200
Source: PRS Annual Reports and author's calculations
Music Publishing Revenues (2012)
Source: Music Publishers Association Annual Report (2013/4).
Table 2 Revenues to Music Publishing 2012 (£m) and
percentage
Collection
societies
Foreign affiliates
Direct licensing
Printed music (sales and
hire
Other
Total
247
334
239
76
8
904
27%
37%
26%
8%
>1%
Value of various rights to a
publisher:percentage (2012)
Popular music
Mechanical royalties
Live performance and broadcasting
Synchronization fees
Other (ring tones, online, sheet music)
40
36
14
10
Classical music
Sales of printed music
Hire fees
Mechanical royalties
Live performance and broadcasting
Synchronization fees
Source: MPA (unpublished)
50
15
12
8
5
What conclusions can be drawn from this
research?
1.
The market environment was the main stimulus to growth of sheet
music and hires: growth of population, incomes, leisure and transport;
falling costs of musical instruments; falling costs of printing music.
2.
Consumers’ adoption of new technologies caused sales to fall.
3.
Failures of copyright law did not prevent growth in music publishing up
to WW1. Presence of performing rights did not provide incentive to
music publishers until sales fell; however, 1911 Act was effective in
introducing mechanical rights.
4.
Music publishers followed the money rather than leading the market.
5.
Business models are possibly more significant in understanding the
economic history of music publishing than copyright law.
What does history tell us?
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History may not repeat itself but some trends are remarkably similar. Interaction of market
and copyright law: law inevitably lags behind market trends.
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Music market has always been international. Trend now exacerbated by globalisation of
taste, growth of incomes and access to internet.
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Markets change due to unanticipated sources of exogenous technological change. Speed of
entrepreneurial response to these changes determines success.
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Large corporations are often sclerotic: new entrants are innovators. Competition in industry
important for keeping up with economic, technological and cultural trends.
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Music publishers’ intermediary role in the chain of musical production is important for its
A&R but other professionals now involved in that role; also record labels.
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Present day business models attuned to rights management. Threat from better data
management?
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