With Australian musicians seeing decreasing revenue from retail sales of recorded music; the licensing and broadcasting of their music has become an increasingly important revenue base for struggling artists.
APRA|AMCOS, the organisation responsible for collecting some of these royalties, which are generated from the use of music publicly on television, radio, at concerts, has just released their financial results for the 2011/12 financial year and it’s mostly good news for Australia’s musicians.
The national music copyright organisation announced it had distributed 14% more in royalties to its members year-on-year, which was labelled as “exceptional” by Chief Executive Brett Cottle.
“The real story has been the significant increase in distributions paid to members and to affiliated societies,” says Cottle. “Total royalty distributions grew by $28.9 million across the two societies, to $236.9 million – an increase of 13.9% on the preceding year.”
The increase has resulted from record revenue growth in the recording rights arm of its business, AMCOS, and from a program of accelerated distributions across all areas of its operations.
Revenue for the group, which represents songwriters, composers and music publishers, grew by 7.2% overall, to $257.4 million. APRA revenue – representing music royalties for public performances, broadcasts and online communications – grew by 1.5% to $185.7 million, while AMCOS revenue – representing royalties from physical sales, digital downloads and other reproductions of music – grew by more than 25% to $71.7 million.
But the revenue profile for APRA in 2011/2012 was mixed and varied, reflecting the multi-speed nature of current Australian and New Zealand economic conditions.
Physical product mechanical royalties were flat at $5.3 million while new media revenue – excluding downloaded material – grew strongly on a small base (up 17.0% to $0.9 million). Foreign revenue declined by 15.0% to $0.5 million.
Television revenue grew on average by 4% while radio revenue declined on average by 2%. New media revenue- encompassing digital download performance income, subscription and ad-funded streaming, video-on-demand and websites – grew by 16.6% to $9.6 million, while revenue from public performances declined by 3.1% to $55.7 million.
All in all, over 244,623 writers and publishers received an APRA distribution payment this past financial year – representing nearly a quarter of a million unique musical works.
“The resulting pay-outs to writers and publishers of $170.2 million and $66.7 million respectively are record figures for both societies and represent unprecedented year on year growth in distributions,” says Cottle.
“In APRA’s case the increase in payments to members flowed from modest growth in domestic licensing revenue – up 0.8% to $160.9 million – and significant growth in foreign income – up 9.1% to $22.1 million, an extraordinary achievement given the historic strength of the $AUD against the currencies of our major trading partners.”
“Added to these factors was the impact of faster processing of distributions to members from both domestic and foreign revenue sources. By year’s end more than 98% of APRA’s disputable revenue had been migrated to a quarterly distribution cycle.”“The cultural health of the nation, as measured by its output or original creative works, is crucially dependent on two key pillars – transparent, effective service organisations for creators and a strong, clear copyright law.”
“The practical implication for members is that, on average, APRA is now distributing six months’ worth of distributable revenue three months earlier than was the case two years ago.”
“System improvements related to our processing of reign income have also resulted in greatly accelerated clearing of foreign royalty receipts to members.”
“In AMCOS’ case the extraordinary increase in funds distributed (37.8% year on year) reflects both significant growth in revenue for the year (in turn impacted by solid underlying growth in most business lines and an important one-off factor) and the impact of a concerted policy to clear funds to members more quickly and more efficiently.”
“The one-off factor referred to was the clearing of major record label control (unidentified) accounts as part of an industry-wide agreement under which AMCOS has contracted with the labels to manage the maintenance of their works copyright ownership data. ”
“The result of this agreement 0 which will have dramatic long-term effects in keeping to an absolute minimum the funds held in control accounts – was to produce a non-recurrent revenue spike of $6.4 million in AMCOS’ operating revenue. The great majority of this sum had been distributed to the correct copyright owners by year end on a zee-rated commission basis.”
“Excluding the impact of this extraordinary item, AMCOS’ revenue grew by a robust 15.4%, driven by a further 21% growth in income from digital downloads (to $25.2 million), a 37.4% increase in broadcast mechanicals (to $12.5 million) and a 21.9% increase in licence fees paid by educational institutions (to $7.8 million).”
Cottle highlighted new licence schemes negotiated with the airline industry, the fitness industry, commercial free-to-air television, schools, and the operators of video on demand services as some of the factors in the incredible increase in revenue.
During the year ahead, negotiations on new agreements will take place with the subscription television industry and concert promoters. Cottle expects to see a return to more normal growth levels in revenue receipts across the APRA and AMCOS business over the next year.
Other highlights included a 9.1% increase in international revenue for Australasian music creators – a new record of $22.1 million, confirming the growing international interest in the work of Australian songwriters, with Australia now being the sixth largest recording market in the world . In addition, revenue from digital downloads and online sources grew by 17.9% to 35.6 million.
Over coming years APRA and AMCOS will be involved in extensive work and expense in the area of system development, including increased use of music recognition technology, and the migration of client transactions to digital and mobile platforms.
The coming year will also involve an extensive review boy the Australian Law Reofrm Commission of copyright law as it applies to the “Digital Economy”. APRA and AMCOS have promised to be active submission-makers to this inquiry and Cottle and his team’s message will be simple.
“The cultural health of the nation, as measured by its output or original creative works, is crucially dependent on two key pillars – transparent, effective service organisations for creators and a strong, clear copyright law compatible with international standards and the principle of fair reward for creative effort.”