An Empirical Analysis of Music Streaming Revenues and Their Distribution

Thu, 23 Sep 2021 10:00:00 +0000

This report was commissioned by the Music Creators’ Earnings Project to provide an empirical analysis of music streaming revenues in the UK.

It showed that:

total market growth often hides flat or declining individual earnings,
exchange rate effects played a major role in sustaining incomes during 2015–2019,
and current remuneration schemes and pro-rata distribution systems do not adequately reflect the value of music for most rightsholders.

The study argued for international data harmonisation, better survey methods, and policy coordination to make earnings more transparent and equitable.

📄 Full report PDF
📄 Zenodo record

Research & Analysis: Music Creators’ Earnings in the Digital Era

Thu, 23 Sep 2021 08:00:00 +0000

Reprex with its Digital Music Observatory team was commissioned to prepare an analysis on the justified and not justified differences in music creators’ earnings. We have posted our most important findings in an earlier blogpost (Music Creators’ Earnings in the Streaming Era. United Kingdom Research Cooperation With the Digital Music Observatory.

The UK Intellectual Property Office has published the entire report on the music creators’ earnings, and we have made our detailed analysis available in a side-publication. Reprex also signed an agreement with the researchers of the Music Creators’ Earnings project to deposit all data published in the report in the Digital Music Observatory, and to promote the building of the observatory further.

The research questions asked in this report are related to the Music Creator Earnings’ Project (MCE), exploring issues concerning equitable remuneration and earnings distributions. We were tasked with providing a longitudinal analysis of earnings development and relating our findings to equitable remuneration. The starting point of our work was centred around a very broadly defined problem: how much money music creators (rightsholders) earn from streaming, how these earnings are distributed, and how the earnings and their distribution have developed during the last decade.

The highly globalized music industry generates two important international reports, as well as several national reports, but these are not suitable for the analysis of the typical or average rightsholder, nor for small labels and publishers who do not represent a large and internationally diversified portfolio of music works or recordings. Copyright and neighboring right revenues are collected in national jurisdictions. Because British artists are almost never constrained by their use of language, and the UK Music Industry is highly competitive in the global music markets, even relatively less known rightsholders earn revenues from dozens of national markets. The lack of market information on music sales volumes, prices for each jurisdiction, and the unaccounted for national, domestic, and foreign revenues makes the analysis of the rightholder’s earnings, or the economics of a certain distribution channel like music streaming or media platforms, impossible.

The Effect of International Diversification on Revenues - a combination of international price differences and exchange rate fluctuations.

While total earnings are reported by international and national organizations, they hide five important economic variables: changes in sales volumes, changes in prices, market share on various national jurisdictions (which have their own volume and price movements), the exchange rates applied, and the share of the repertoire exploited. Even worse, the global music industry has no comprehensive database of rightsholders, music works, and recordings – this is the data gap that we would like fill with the Digital Music Observatory.

Our report highlights some important lessons. First, we show that in the era of global music sales platforms it is impossible to understand the economics of music streaming without international data harmonization and advanced surveying and sampling. Paradoxically, without careful adjustments for accruals, market shares in jurisdictions, and disaggregation of price and volume changes, the British industry cannot analyze its own economics because of its high level of integration to the global music economy. Furthermore, the replacement of former public performances, mechanical licensing, and private copying remunerations (which has been available for British rightsholders in their European markets for decades) with less valuable streaming licenses has left many rightsholders poorer. Making adjustments on the distribution system without modifying the definition of equitable remuneration rights or the pro-rata distribution scheme of streaming platforms opens up many conflicts while solving not enough fundamental problems. Therefore, we suggest participation in international data harmonization and policy coordination to help regain the historical value of music.

Context

The idea of our Digital Music Observatory was brought to the UK policy debate on music streaming by the Written evidence submitted by The state51 Music Group to the Economics of music streaming review of the UK Parliaments’ DCMS Committee¹.

The music industry requires a permanent market monitoring facility to win fights in competition tribunals, because it is increasingly disputing revenues with the world’s biggest data owners. This was precisely the role of the former CEEMID² program, which was initiated by a group of collective management societies. Starting with three relatively data-poor countries, where data pooling allowed rightsholders to increase revenues, the CEEMID data collection program was extended in 2019 to 12 countries.The final regional report, after the release of the detailed Hungarian, Slovak and Croatian reports of CEEMID was sponsored by Consolidated Independent (of the state51 music group.)

CEEMID was eventually to formed into the Demo Music Observatory in 2020³, following the planned structure of the European Music Observatory, and validated in the world’s 2nd ranked university-backed incubator, the Yes!Delft AI+Blockchain Validation Lab. In 2021, under the final name Digital Music Observatory, it became open for any rightsholder or stakeholder organization or music research institute, and it is being launched with the help of the JUMP European Music Market Accelerator Programme which is co-funded by the Creative Europe Programme of the European Union.

In December 2020, we started investigating how the music observatory concept could be introduced in the UK, and how our data and analytical skills could be used in the Music Creators’ Earnings in the Streaming Era (in short: MCE) project, which is taking place paralell to the heated political debates around the DCMS inquiry. After the state51 music group gave permission for the UK Intellectual Property Office to reuse the data that was originally published as the experimental CEEMID-CI Streaming Volume and Revenue Indexes, we came to a cooperation agreement between the MCE Project and the Digital Music Observatory. We provided a detailed historical analysis and computer simulation for the MCE Project, and we will host all the data of the Music Creators’ Earnings Report in our observatory, hopefully no later than early July 2021.

The Digital Music Observatory contributes to the Music Creators’ Earnings in the Streaming Era project with understanding the level of justified and unjustified differences in rightsholder earnings, and putting them into a broader music economy context.

We started our cooperation with the two principal investigators of the project, Prof David Hesmondhalgh and Dr Hyojugn Sun back in April and will start releasing the findings and the data in July 2021.

Join us

Do you need high-quality data for your music business or institution? Are you a music researcher? Join our open collaboration Digital Music Observatory team as a data curator, developer or business developer.

Footnote References

state51 Music Group. 2020. “Written Evidence Submitted by The state51 Music Group. Economics of Music Streaming Review. Response to Call for Evidence.” UK Parliament website. https://committees.parliament.uk/writtenevidence/15422/html/. ↩︎
Artisjus, HDS, SOZA, and Candole Partners. 2014. “Measuring and Reporting Regional Economic Value Added, National Income and Employment by the Music Industry in a Creative Industries Perspective. Memorandum of Understanding to Create a Regional Music Database to Support Professional National Reporting, Economic Valuation and a Regional Music Study.” ↩︎
Antal, Daniel. 2021. “Launching Our Demo Music Observatory.” Data & Lyrics. Reprex. https://dataandlyrics.com/post/2020-09-15-music-observatory-launch/. ↩︎

United Kingdom | Daniel Antal

An Empirical Analysis of Music Streaming Revenues and Their Distribution

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Research & Analysis: Music Creators’ Earnings in the Digital Era

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