Exploration Weekly - Barcelona Appeals Court Rules That SGAE “Abused Its Position” In The Market / Music Revenues Climb 10% to $28.6 Billion / Spotify Releases Loud & Clear Report

From digital distributors and administrative representatives to more traditional industry players like record labels and music publishers, there is a head-spinning array of companies that administer content and collect royalties on behalf of creators.

Changing copyright representatives is a regular part of the music business. It does not have to be an emotional or negative experience. As the goals for your music and/or the goals for your business develop and change over time, you may come to realize that your current arrangements no longer serve your needs.

Our guide provides a road map to switching providers, and should help copyright owners obtain the best services available for their works.

With that in mind: every situation is unique, and we do not intend for the following steps to serve as end-all-be-all instructions for anyone. Those signed to deals with major record labels, major publishers, and other entertainment companies may face greater difficulty when attempting to terminate an agreement or switch to a different service provider. Always consult with an attorney before signing any new agreement.

If you would like to learn more about our copyright administration services to find you unclaimed royalties, please visit our website.

In this newsletter:

• Barcelona Appeals Court Rules That Spanish Authors’ Society SGAE “Abused Its Position” In The Market, In Victory for Rival UNISON
• IFPI Global Report 2024: Music Revenues Climb 10% to $28.6 Billion
• Spotify Discloses 2023 Per-Stream Royalty Rate, Artist Earnings Stats, and More in Loud & Clear Report
• Italian Recorded Music Revenues Rise By 18.8% in 2023
• Major Labels and Cox Communications Denied New Appeal in $1 Billion Copyright Infringement Case

The Spanish Society of Authors and Publishers (SGAE) has been found guilty of abusing its dominant position by preventing members from switching to a competing agency, according to a court ruling in Barcelona, marking a victory for UNISON, a music rights management company that was hindered by SGAE's anti-competitive practices.

In 2023, global music sales continued their upward trajectory, marking the ninth consecutive year of growth, according to the IFPI's Global Music Report 2024. Recorded music revenues increased across all markets and regions, reaching a total of $28.6 billion, representing a 10% rise from the previous year and the second-highest growth rate on record.

Spotify released its latest Loud and Clear analysis, revealing it paid over $48 billion to the industry, including $9 billion in 2023. The report emphasizes Spotify's role as a supplementary revenue source, encouraging readers to estimate overall revenue from recorded music sources.

Now, the details...

Exploration Weekly - March 22, 2024
Compiled by Ana Berberana

Barcelona Appeals Court Rules That Spanish Authors’ Society SGAE “Abused Its Position” In The Market, In Victory for Rival UNISON

The Spanish Society of Authors and Publishers (SGAE) “abused its position” as the country’s dominant collective management organization (CMO) to prevent members from switching to a competing agency, a court in Barcelona has concluded. The ruling marks a victory for UNISON, a Barcelona-based private music rights management company set up in 2017 as a competitor to SGAE, which found its efforts in the market stymied by what it has described as SGAE’s “anti-competitive practices.” In a February 16 ruling, the Provincial Court of Barcelona effectively upheld a 2019 ruling by the Spanish Competition Authority (CNMC) that SGAE had “abused its dominant position in the management and exploitation of intellectual property rights of authors and publishers of musical works” by “imposing contractual conditions that oblige the author to entrust the management of all the rights to [their] works.” The same year as the CNMC ruling, SGAE was kicked out of CISAC, the international umbrella group of authors’ and composers’ societies, over allegations of corruption that included claims it gave unfair advantages to certain rightsholders. Those claims centered around “The Wheel,” an apparent “scam” under which the music of certain SGAE members was played throughout the night on certain Spanish TV stations, enabling those rights holders to claim a larger chunk of royalty payouts. SGAE was readmitted to CISAC in 2021, after reforms to its governance practices and Board composition. In its investigation, CNMC concluded that, by requiring rightsholders to either hold or all or none of their rights with SGAE, the organization in effect prevented rights holders from moving some parts of their rights (for instance, music streaming or live performance) to other organizations such as UNISON. CNMC ordered SGAE to pay a EUR €2.95 million fine. Spain’s National Court struck down that fine this past January, but the Barcelona court, in its recent ruling, said that this didn’t invalidate the rest of the original ruling against SGAE. The court gave UNISON the green light to proceed with legal action against SGAE to seek damages for lost income.

IFPI Global Report 2024: Music Revenues Climb 10% to $28.6 Billion

Global music sales grew for the ninth consecutive year in 2023, with recorded music revenues increasing in every market and region, and across almost all formats, according to the International Federation of the Phonographic Industry’s (IFPI) Global Music Report 2024. Total revenues climbed to $28.6 billion, a rise of just over 10% on the previous year, and the second highest growth rate on record after 2021’s 18.5% year-on-year spike. 2023’s total sales figure is the highest level since 1999 — when IFPI first started compiling global music revenues and sales totaled $22.2 billion — on an absolute dollar basis, not accounting for inflation. Piracy and declining physical sales saw the market bottom out at $13 billion in 2014. Driving last year’s growth was an 11.2% rise in paid streaming subscription revenue, which totaled $14 billion, up from $12.7 billion in 2022, and accounted for almost half (48.9%) of global music sales. The rise in global paid streaming revenue comes after many of the leading streaming services, including Spotify, Apple Music, Amazon Music, YouTube Music and Deezer, all raised their subscription prices in key territories over the past 12-18 months. For the majority of streaming services, the hikes were their first price rises since launching more than a decade ago. Despite the rising cost for consumers, the number of music streaming subscribers continues to grow globally, with IFPI reporting that the number of paid subscriptions to streaming services surpassed 500 million for the first time in 2023. When shared usership and family accounts are considered, there are now more than 667 million users of paid subscription accounts globally, says the London-based organization, up 13% from the 589 million recorded in the previous 12 months. Total streaming revenues, comprising of paid subscription and advertising-supported tiers, rose 10% to $19.3 billion to make up 67% of worldwide recorded music sales, roughly flat with last year’s share of the market.

Spotify Discloses 2023 Per-Stream Royalty Rate, Artist Earnings Stats, and More in Loud & Clear Report

Stockholm-based Spotify unveiled its latest Loud and Clear analysis today, after revealing a portion of the breakdown in early February. In the preview, the music, podcast, and audiobook service emphasized that it had paid a total of north of $48 billion to the industry (including $9 billion during 2023). Returning to the just-released full report, though, Spotify throughout the document pointed to its role as a supplemental revenue source – going as far as encouraging readers to multiply artists’ on-platform royalties by four to estimate “revenue from recorded music sources overall.” Additionally, the business drew attention to the potential income associated with live performances, merch sales, and more. In brief, this focus on diverse revenue sources has arrived amid continued emerging-market user growth for Spotify. The service previously reported an average of 602 million monthly active users for Q4 2023 – with 54 percent of the individuals residing beyond North America and Europe. Notwithstanding their long-term potential, many music spaces outside the latter two continents are currently difficult to monetize, with comparatively small monthly costs and advertising contributions. But as the streaming-partial nations are still producing all manner of plays – Luminate identified 1.04 trillion total on-demand streams in India during 2023, second only to the U.S. (1.45 trillion) and followed by Brazil (373.5 billion) – the much-discussed per-stream royalty rate is still dipping. Running with the idea, Spotify spelled out in Loud and Clear 2023 that “artists can start approaching $1 million per year [in Spotify recording royalties] with around 4-5 million monthly listeners or 20-25 million monthly streams.” Calculating based on the implied annual stream count of 240 million to 300 million (and acknowledging the “start approaching” phrasing’s ambiguity), that comes out to an average of $0.003 to $0.004 per stream. For reference, the high end of that range was in the not-so-distant past widely reported as $0.005 – a telling point given the sweeping (and controversial) payout changes Spotify has implemented. Predictably, Spotify, which also made available a lengthy FAQ, a “Streaming Numbers in Context” calculator, and more, opted to draw attention to different stats behind its 2023 royalty payouts. All told, approximately 66,000 artists generated at least $10,000 in on-platform payments last year, with over half the acts based in “countries where English is not the first language,” per the Daniel Ek-led entity. 11,600 professionals topped $100,000 in Spotify royalties during 2023, and 1,250 made their way into the $1 million category, the document shows.

Italian Recorded Music Revenues Rise By 18.8% in 2023

Italian music recorded revenues topped €440 million ($477.87M) in 2023, one of the highest growth rates in the world. FIMI also reveals that this pushes Italy into the third-largest music market in the European Union. The growth in Italy is driven primarily by streaming—which accounts for 65% of market share with streaming revenues growing 16.2% last year to top €287 million ($311.68M). There are now over 6.5 million premium music subscribers in Italy, a rise of 9% compared to 2022. Revenues from subscriptions to streaming platforms have led the sector, with the premium segment growing by 18.4% with more than €190 million ($206.34M) in revenues. For the digital area, the download segment saw a significant decrease of 11.8% in 2023. FIMI also highlights the IFPI Engaging with Music report, specifically that Italian consumers spent around 20.9 hours per week listening to music in 2023. 60% of that time is spent listening to digital music, equally divided between DSPs like Spotify and short or long-form video formats like TikTok and YouTube. 73% of Italian consumers listened to music on licensed DSPs, either with a subscription or through ad-supported listening. The physical segment in Italy also reported growth, positioning the market as the 8th biggest worldwide. Physical recorded music revenues in Italy brought in €62 million ($67.33M) for a 14.4% increase. Physical sales now account for 14% of market share in the country, with vinyl leading the physical sector (24.3%). CDs also experienced a small growth spurt of 3.8% for the year. FIMI says the impact of the Italian Government Culture Bonus has played a central role in helping the Italian music market expand. The bonus raised €11 million ($11.95M) and the overall impact on the recorded music market in the past seven editions is €122 million ($132.51M). FIMI highlights that 80% of the albums in the Top 100 for the country are Italians, a figure that was only 63% in 2013. 793 albums reached the 10 million streaming threshold for the Italian Tax Credit, compared to just 235 titles in 2022. In 2012, only 137 albums reached the threshold, representing 479% growth over ten years.

Major Labels and Cox Communications Denied New Appeal in $1 Billion Copyright Infringement Case

In a decision on Tuesday (March 19), a three-judge panel of the Fourth Circuit Court of Appeals declined to rehear an earlier ruling by the court in which it tossed out a $1 billion award for damages against Cox, and ordered a retrial to determine the amount of damages to be awarded. In their decision, the judges offered no reasons for not rehearing the case. The long-running case has pitted dozens of recording companies, including Sony Music (the lead plaintiff), Universal Music Group and Warner Music Group, against Cox Communications, the third-largest provider of broadband internet services in the US as of 2022, over piracy of music taking place on its networks. The music companies’ lawsuit against Cox, originally filed in 2018, alleged that Cox “knowingly contributed to, and reaped substantial profits from, massive copyright infringement committed by thousands of its subscribers.” The lawsuit was widely seen as a “test case” of whether an internet service provider (ISP) can be held liable for the infringement of its subscribers. In 2019, jurors in a federal court in Virginia sided with the music companies, declaring that Cox Communications had committed both “contributory infringement” and “vicarious infringement” of the music companies’ copyrights, by not taking enough action to prevent piracy on its networks. The jury ordered Cox to pay more than $99,000 per track infringed by its subscribers on peer-to-peer file-sharing networks. With 10,017 musical works cited by the music companies, the total damages came to around $1 billion. Cox called that judgment “unwarranted, unjust and an egregious amount,” and eventually filed an appeal with the Fourth Circuit Court of Appeals. In February of this year, the court struck down the $1-billion award. “We affirm the jury’s finding of willful contributory infringement. But we reverse the vicarious liability verdict and remand for a new trial on damages because Cox did not profit from its subscribers’ acts of infringement, a legal prerequisite for vicarious liability,” the appeals court ruled.

Random Ramblings

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• Ariana Grande rules Hot 100 Songwriters & Producers Charts for the first time.
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• The sound of cruelty.