NMPA Announces 11.8% Member Revenue Growth to $3.3B at Annual Meeting
For the first time in recent memory, the U.S. music publishing sector grew at the same rate as the recorded music sector, said president and CEO David Israelite.
The National Music Publishers Association annual member survey found that its U.S. publisher members had revenue of $3.3 billion -- up 11.8% growth from last year’s $2.957 billion -- according to NMPA president and CEO David Israelite.
Speaking at the organization's annual meeting, Israelite pointed out for the first time in recent memory, the U.S. music publishing sector grew at the same rate as the recorded music sector. "In recent times, we had lagged behind" in the last three years, he said.
Overall, that revenue broke out to 54.56% performance, 21.09% synchronization, 6.59% other and 17.76% mechanical. Breaking out the performance component, Israelite reported that digital comprised 32.64%, while radio contributed 13.06% and TV 8.75%.
He also noted that the pie chart looks the same, even as the pie gets bigger, meaning the various licenses are growing at the same pace. Moreover, while record labels derived 86% of revenue from digital, he said music publishers have more diverse income streams driving their growth. "The key takeaway is that the state of the industry is strong," he declared.
The growth and the strength in music publishing, as displayed by those measurements, are all without having the impact of the music publishing victories from the last year. Those include the Copyright Royalty Board's rate determination that increased the headline rate 44% over a five year-licensing period, the Music Modernization Act's favorable changes for songwriters in the way rate court and the CRB will set rates going forward and the U.S. Department of Justice's plan to review the consent decrees under which ASCAP and BMI operate. Those victories "are not yet baked in" to that growth, Israelite said.
In talking about the CRB rate, Israelite said that the two leading services, Apple and Spotify, are already paying above the headline rate. "Apple already paid above the compulsory rate because they are good partners," Israelite said. "Spotify pays a criminally low rate, but thankfully the minimum kicks in." (The statutory rate is comprised of a three tier formula and one of the tiers, called the minimum, which is based on 50 cents per subscriber, creates a pool that traditionally turns out to be the largest pool of funding.)
As for Spotify, Amazon, Google and Pandora's recent appeal of the CRB rate increase, Israelite said, "It's bad enough we have a compulsory license. It's worse that after two years of rate trail, we are not yet getting the rate because of an appeal." But he assured the NMPA members that the NMPA would continue the fight for the rates that were won.
Moving on, Israelite said soon the MMA would be implemented. Very shortly, "This manufactured drama over who will be [designated to run the] MLC will be over," he said. The Copyright Office will announce its decision by July 8 on whether the group hosted by the NMPA would win, or the other group, the American Music Licensing Collective.
Later, Israelite reminded the audience that just last year at this annual meeting Justice Department assistant attorney general for the antitrust division Makan Delrahim announced the department was once again reviewing the consent decrees. Now, last week it announced it opened that review and sent out a request for comment. "We are working with ASCAP and BMI and the most important songwriter advocate on the planet, [ASCAP chairman] Paul Williams," he said. "We will work to get changes for the better for the songwriter."
However, Israelite warned, it will be an uphill battle due to the opponents on this issue. Optimistically he added, "We just fought against digital and we beat them in court... You can beat a bigger industry in court." But now, in addition to the digital sector, this time will see general licensees and radio. Combined with digital, the $3.3 billion music publishing industry will be fighting against industries that collectively have more than a hundred times that volume, according to a slide Israelite presented.
Also, because of the MMA, any changes contemplated for the consent decree must bring Congress into the process. Consequently, "This will be a fight in Congress," he said, and considering the odds, the music publishing community "needs to stand together."
Finally, Israelite pointed out that in the past year, NMPA legal action on copyright infringement had brought in $46.4 million, which Israelite said equaled a 330% return on the dues. Since, the modern NMPA was launched in 2005, the 102-year-old organization had put back over $700.4 million into the music publishing industry coffers, he added. "As far as I know, we are the only trade association where being a member acts as a profit center."