Exploration Weekly - BMG Grows Revenues to €414M / US Copyright Office Declines To Revisit the Section 115 Compulsory License / Italy’s Recorded Music Revenues Grew 14.2% in H1

Albums, singles, LPs, EPs, mixtapes, compilations — the music industry uses a whole host of classifications for commercial releases. As technology evolves away from the original mediums that gave them their names, the definitions have grown convoluted. There are no universal, definitive rules or guidelines for classifying releases. However, by gaining a basic understanding of the history of audio formats and commercial releases, individuals can get a fundamental understanding of the purpose behind these terms and categories.

In this newsletter:

• BMG Grows Revenues to €414 Million, Up 11.5% YOY
• Copyright Office Declines To Revisit the Section 115 Compulsory License
• Italy’s Recorded Music Revenues Grew 14.2% in H1, With 19 of the Top 20 Best-Selling Albums All by Local Acts
• US Copyright Office Identifies Four Key Topics as it Opens a Consultation on Artificial Intelligence
• SOURCE Hall Of Fame Inducts Seven ‘Women Behind The Music’ At 20th Anniversary Event

Bertelsmann's half-year report highlights BMG's impressive performance, with revenues reaching €414 million, marking an 11.5% increase from last year's €371 million.

In response to singer-songwriter George Johnson's request for a study on repealing the Section 115 compulsory license, the US Copyright Office has deemed a new inquiry "premature."

Recorded music revenues in Italy experienced a substantial 14.2% year-on-year growth in the first half of this year, totaling €175 million.

Now, the details...

Exploration Weekly - September 1, 2023
Compiled by Ana Berberana

BMG Grows Revenues to €414 Million, Up 11.5% YOY

As part of a new half-year report, media group Bertelsmann has revealed that BMG has seen its revenues swell to €414 million, up 11.5% compared to the €371 posted in 2022. The rise, it stated in a new interim report published today, was driven by both “organic and acquisition-based growth” in publishing and recorded music. The operating EBITDA of BMG stands at €90 million, compared to €73m in 2022, representing a 22.6% rise. The interim report stated that digital businesses accounted for 63% of BMG’s revenues, which was down 2022’s H1 of 69%. BMG said “Higher digital revenues were offset by comparably strong growth in live revenues due to post-pandemic developments.” The year has, so far, been one of change for the music company. Thomas Coesfeld, the former CFO of BMG, took the reins from Hartwig Masuch to become the music company’s new CEO with effect from July 1, 2023 – six months ahead of the original schedule. The interim report outlined that his focus "going forward will include a more intensive collaboration with customers and partners, delivering greater efficiency and effectiveness and renewing the company's corporate culture". Speaking about the results, Coesfeld said: “This is a strong performance in the face of an increasingly tough market. We achieved double-digit growth in both revenues and EBITDA. We struck 15 acquisition deals with artists and writers including The Hollies, Paul Simon and SNAP! And we scored significant success with clients including Kylie Minogue, Rita Ora, Jason Aldean, Mura Masa, Jelly Roll, Lewis Capaldi and Godsmack. Against the background of a soft advertising market, a maturing subscription streaming business and a physical music market impacted by inflation-driven cost increases, this is a very positive result.” He added: "With a continuing strong performance from our catalog and a dynamic release slate including new material from Kylie Minogue and Jason Aldean, we are cautiously optimistic for the year-end. BMG has successfully carved out a distinctive position for itself as the most service-driven and artist-friendly music company. We plan a series of measures to further enhance that USP.”

Copyright Office Declines To Revisit the Section 115 Compulsory License

In late June, singer-songwriter and copyright-reform activist George Johnson urged the Copyright Office to initiate a study concerning the repeal of the Section 115 compulsory license. Now, the Office, citing changes already implemented under the MMA, has expressed the belief that a new inquiry would be “premature.” The Copyright Office just recently responded to the formal request, and a copy of the government entity’s approximately 400-word-long message was shared with Digital Music News. To recap, Johnson previously explained his position in a letter to Register of Copyrights Shira Perlmutter as well as an approximately 19-page supplemental resource. Within the documents, Johnson stressed the Big Three labels’ alleged “anticompetitive misuse of the compulsory license” at the Copyright Royalty Board and made clear his view that said license had been “designed for a different time.” In support of the stance, the musician took aim at the “broken” Mechanical Licensing Collective and, elaborating upon the initial point, drew attention to the perceived conflict of interest stemming from the major labels’ also owning today’s largest publishers. Back to the newly penned response from the Copyright Office – and specifically associate register of copyrights Suzy Wilson – the text off the bat points to alterations enacted via the Music Modernization Act as the main reason for deciding against initiating the sought study. “As the changes made to the license through the MMA have been effective only for the past two and a half years,” reads the relevant portion of the message, “the Office believes that it would be premature at this time to engage in a new study of the section 115 license.” Additionally, the brief response points to the Office’s 2015 “Copyright and the Music Marketplace” policy report, which is said to have brought with it (among many other things) a recommendation of “modernizing, but not repealing, the section 115 license.”

Italy’s Recorded Music Revenues Grew 14.2% in H1, With 19 of the Top 20 Best-Selling Albums All by Local Acts

Recorded music revenues in Italy grew 14.2% YoY in the first half of this year to €175 million. That’s according to stats published today (August 29) by FIMI, the organization that represents the Italian recorded music industry, and whose members include Universal Music, Sony Music, Warner Music and BMG. Italy’s H1 recorded music revenues were up €22 million on the €153 million generated in H1 2022. Digging deeper into FIMI’s latest results for the Italian recorded music market shows that Italy’s revenues generated from streaming reached €139 million in the first six months of 2023, up 16% YoY. Within the streaming segment, revenues from subscription streaming grew 18.2% YoY, while revenues from ad-supported streams grew 22.9% YoY. There was a decrease of 0.5% YoY for revenues from video streaming. Streaming accounted for 81% of the entire recorded music market in Italy in H1. Elsewhere in Italy, FIMI reports that the physical music sector, including vinyl and CDs, now has a 17% share of the entire recorded music market. Physical revenues in Italy in H1 grew 9.4% YoY. FIMI reports that this growth within the physical music sector was driven by vinyl sales, which grew by 14.3% YoY. FIMI also notes that it saw “a trend reversal” for the CD in H1 2023, with that format’s revenues growing by 5.3% YoY in the first six months of the year.

US Copyright Office Identifies Four Key Topics as it Opens a Consultation on Artificial Intelligence

The US Copyright Office has opened up a public consultation about all the copyright issues raised by artificial intelligence and especially generative AI. It is now inviting any interested parties to submit their opinions and positions, identifying four main topics for debate and posing a stack of more specific questions. Its formal announcement in the Federal Register states that, to “help assess whether legislative or regulatory steps in this area are warranted”, the Copyright Office “seeks comment on these issues, including those involved in the use of copyrighted works to train AI models, the appropriate levels of transparency and disclosure with respect to the use of copyrighted works, and the legal status of AI-generated outputs”. The American music industry is sure to have lots of opinions to share. There has, of course, been lots of debate in recent months within the music community about the challenges and opportunities posed by AI, including the AI models that generate music. For the music industry at large, the first of the four topics identified by the Copyright Office is probably the priority. That relates to when an AI company uses existing copyright-protected works – for example songs and recordings – to train its generative AI models. The music industry – and other copyright industries – are adamant that any such training requires consent from the copyright owner and, without that consent, the AI company is liable for copyright infringement. But not all AI companies agree. “The Office is aware that there is disagreement about whether or when the use of copyrighted works to develop datasets for training AI models is infringing”, the Office’s announcement says. “This notice seeks information about the collection and curation of AI datasets, how those datasets are used to train AI models, the sources of materials ingested into training, and whether permission by and/or compensation for copyright owners is or should be required when their works are included”.

SOURCE Hall Of Fame Inducts Seven ‘Women Behind The Music’ At 20th Anniversary Event

Seven more deserving music industry veterans were inducted into the SOURCE Hall of Fame on Tuesday night (Aug. 29) at the Musicians Hall of Fame and Museum in Nashville’s historic Municipal Auditorium. SOURCE Nashville Hall of Fame inductees are nominated and inducted based upon peer recommendations, biographies, accomplishments, reputation, the number of years the individual has worked within the entertainment industry and level of community involvement. All inductees have made a significant impact on the Nashville entertainment industry. The event that honors seven “Women Behind The Music” marked its 20th anniversary on Tuesday. Country Music Hall of Fame member Brenda Lee and Grand Ole Opry Star Jeannie Seely hosted the sold-out in-person event. This year’s honorees included Marcie Allen Van Mol, Renee Bell, Janice Jackson, Jackie Patillo, Becky Shanks, Denise Stiff and Valerie Summers. After SOURCE’s Hall of Fame Awards Chair, Erica Rosa, welcomed everyone to dine, SOURCE President Mallory Mason-Pascal got the awards ceremony started. The inductees were honored by their friends, family and peers, as Lee and Seely told the crowd of their extensive accomplishments. Then, a video from a special client or colleague would play to further highlight the honoree’s impact.

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