What is a Digital Download?

Over the last decade, the digital music industry has gained significant momentum. Many digital platforms—streaming services, downloads, digital media players, webcasters, and more—have grown and consolidated to become major players in an entirely new sector of the music industry. According to Statista, an online market research data portal, over half of all music industry revenue in 2017, or $2.8 billion, can be attributed to digital music. In 2018, 23.6 million people used downloads to access digital music.

The rise of computers and the Internet as both the primary means and medium for music consumption starting in the early 2000s created seismic disruptions within the music industry. As a result, relationships between artists, songwriters, music publishers, record labels, recording artists, distributors, retailers, consumers, and other industry players changed fundamentally.

Digital downloads are a great starting place for anyone seeking to better understand the modern music industry.

Check out some of our other guides on music industry topics at Exploration Learn, or subscribe to our YouTube channel for more information.

In this newsletter:

CMRRA reported an 8.9% year-over-year increase in mechanical royalty payouts in 2023, totaling CAD $78 million (USD $57.8 million). This growth was driven by a 29% rise in audiovisual post-synch, a 20% increase in international collections, and an 8% growth in physical distribution channels.

PRS for Music finds an extra $8 million to be paid out to songwriters after reducing its admin rate and announces its newly elected council members.

SACEM has extended Cécile Rap-Veber's term as CEO after achieving record royalty collections of €1.487 billion in 2023, a 5% increase from 2022. Under her leadership, a strategic plan initiated in 2021 has reduced SACEM’s operating costs-to-collections ratio to 10.76%.

Now, the details...

Exploration Weekly - June 07, 2024
Compiled by Ana Berberana

Canada’s CMRAA Reports 9% Increase in Royalty Payouts for 2023

The Canadian Musical Reproduction Rights Agency (CMRRA) has reported an 8.9% YoY jump in mechanical royalty payouts in 2023. The licensing and collection agency, which represents the vast majority of music publishers doing business in Canada, distributed CAD $78 million (USD $57.8 million at the average exchange rate for 2023) during the year, the company said in a statement issued on Thursday (June 6). The increase in payouts was driven by a 29% YoY jump in audiovisual post-synch, both organically and due to revenue from additional services; a 20% YoY increase in international collections; and 8% YoY growth in physical distribution channels, CMRRA said. Payouts from online streaming services grew by 3% YoY. “We are witnessing a significant uptick in music consumption, a trend that highlights the vibrancy and vitality of the industry, and which also emphasizes the growing demand for music across global audiences,” CMRRA President Paul Shaver said. “We continue to implement strategic enhancements across our services to better meet the evolving needs of our clients. Music Publishers and self-published songwriters are at the heart of everything we do; their success fuels our innovation and drives us to continuously improve. We are committed to providing unparalleled support and opportunities for them to thrive in this ever-changing landscape.” CMRRA, which was acquired by US-based SoundExchange in 2017, announced in January that it had entered into a partnership with another SoundExchange body, the Barbados-based Copyright Society of Composers, Authors and Publishers (COSCAP), in conjunction with SX Works Global Publisher Services. Under the partnership, CMRRA oversees mechanical reproduction rights for COSCAP’s members in the Canadian marketplace, while SX Works manages end-to-end administration on behalf of COSCAP members with The Mechanical Licensing Collective (The MLC) in the US.royalties is distinct from a grant of copyright,” writes the judge.

PRS for Music Squeezes Out Another $8 Million for Songwriters After Dropping Administration Rate

Composers and songwriters are looking to receive an additional $8 million (£6 million) in royalties from online services each year from PRS for Music. CEO Andrea Czapary Martin announced a 20% reduction in the administration rate from multi-territory online (MTOL) royalties’ collection — the result of the collective management organization surpassing its targets and delivering historic distributions and revenues. Announced at its 2024 Annual General Meeting (AGM) on June 4, PRS estimates the reduction will see a “massive £1.5 million more,” paid out to members in each of its quarterly royalty distributions beginning in October this year, to total £47 million more by 2030. Next year, the society will begin a comprehensive review of its administration rates across all revenue streams, with a view to reducing and simplifying them, according to Martin. PRS for Music’s focus on efficiency has delivered consistent year-on-year growth while maintaining a cost-to-income ratio below 10% for a second year running. “We have achieved so much over the last year with radical and technological developments, that last year we paid out a record-breaking £943.6 million in royalties; an increase of nearly 13% on the previous year. We also broke the billion-pound revenue threshold,” says Martin. “I believe that the success of the society should be defined by the success we pass on to songwriters and composers,” Martin concludes. “I am delighted to announce that the reduction in multi-territory online licensing admin fees is a real tangible example of how we are constantly working on behalf of members to be competitive, and to get more money to them, more quickly.” PRS also announced the appointment of four newly elected members to the council: Publisher Council Members Phil Rose (Sentric Music) and Laura Young (S2K Music), and Writer Council Members Mike Stobbie and Pete Woodroffe, the latter having been appointed for a second term.

SACEM CEO Cécile Rap-Veber's Term Extended Following Record Collections of €1.5 Billion

SACEM has extended Cécile Rap-Veber's term as CEO following record collections for the collective management society. In 2023, SACEM (France’s Society of Authors, Composers and Publishers of Music) collected €1.487 billion in royalties – up 5% on 2022. Some 458 trillion streams and downloads were processed in 2023. A strategic plan, launched in 2021, has seen a focus on reducing operating costs. SACEM’s net operating costs-to-collections ratio has come down for the second year running (10.76% in 2023 compared with 11.65% in 2022). “The board has shown that they trust in and are confident in my vision and in my plan,” Rap-Veber told Music Week. “The administration fee was around 15%, and now after three years in my role we are at around 10%,” she added. “We must prove to our creators, our members, that we make no benefit off their backs. We are there thanks to them, these are their works. So as long as I can lower the administration fee, I will do that.” Rap-Veber contrasted SACEM’s model with other collection societies in the US that operate on a for-profit basis, such as BMI “When you are a for-profit company, I don't know how you can lower the administration fee, because the people that own the company must get a return on investment,” she said. Promoted to CEO in 2021, the longstanding SACEM executive is now set to head the Paris-based organization for the rest of the decade, following the backing of the board. She will lead the implementation of two pillars of the strategic SACEM 3.0 vision proposed to the board by 2030 – efficiency for SACEM members, and the aim to be beneficial for society as a whole. “We had a lot of discussion with the board and the idea was, of course, to still focus on efficiency for our members,” said Rap-Veber. “But on top of that, I think that SACEM should do more than just collect, distribute and deliver services. We want to be efficient for members, but we want to be useful for all. So that's what I have presented to my board.” SACEM’s support and protection of its 224,470 members includes various initiatives. A Social Protection and Training Department was created in 2022. In 2024, this department will continue to develop its training offerings, as it becomes an autonomous department reporting directly to the general management. Creators also benefit from personalized support throughout their careers from SACEM’s cultural action programme. In 2023, the organization supported 3,657 projects for the dissemination and promotion of creation and music, both in France and abroad, for a total amount of €22.5 million.

Music Streaming Services Come Out Swinging Against Canada’s New “Discriminatory Tax” That Requires Them to Hand Over 5% of Their Canadian Revenues

Music streaming services are criticizing a new regulation in Canada that requires major streaming services to pay 5% of their revenue to various groups supporting the creation of Canadian content. “We are deeply concerned with today’s decision to impose a discriminatory tax on music streaming services that are already making significant contributions to Canadian artists and culture,” Graham Davies, President and CEO of the Digital Media Association (DiMA), said in a statement issued on Tuesday (June 4). “Streaming is the main source of revenue and engine of growth for music in Canada, benefiting the industry, creators, fans and consumers. And this is effectively a protectionist subsidy for radio.” Among others, DiMA represents Amazon Music, Apple Music, and Spotify. Canada’s Online Streaming Act, a new law enacted in 2023, expanded the power of the federal broadcast and telecom regulator – the Canadian Radio-television and Telecommunication Commission (CRTC) – to include online content. In one of its first regulatory changes under the law, the CRTC announced on Tuesday that, starting on September 1 of this year, any digital service providers (DSPs) not affiliated with a Canadian broadcaster that have revenues of at least CAD $25 million (USD $18.3 million) in Canada annually will have to contribute 5% of that revenue to a number of programs designed to aid Canadian content creators. The rules echo similar requirements that have been enforced on Canadian broadcasters for decades. Among the affected platforms are Netflix and Disney+ on the video side, and Spotify, Apple Music, and Google Play Music on the audio side. Music streaming services – what the CRTC calls “audio online undertakings” – will have to pay into a number of funds and organizations, including the Foundation Assisting Canadian Talent on Recordings (FACTOR) and its French-Canadian equivalent, Musicaction.

Copyright Case That Could Impact the Entire Reggaeton Genre Allowed to Proceed

A US judge this week declined to dismiss a lawsuit that pretty much accuses the entire reggaeton genre of copyright infringement. The litigation - which names Bad Bunny, J Balvin and Daddy Yankee among its defendants - claims that a distinctive drum pattern created by Jamaican producers Steely & Clevie in 1989 has been used without permission in at least 1800 reggaeton tracks. Defense attorneys presented various arguments as to why the case should be dismissed forthwith, including that the drum pattern in question is not sufficiently original to enjoy copyright projection. Or that the drum pattern has basically become a ‘scène à faire’ - ie obligatory element - in the reggaeton genre, and as such should not be protected by copyright, however original it may or may not be. However, judge André Birotte Jr said that none of those arguments justified dismissing the litigation at this point. The court could not, at this stage, “examine the history of the reggaeton and dancehall genres and dissect the genres’ features”, he said. And so it was not possible to determine whether the drum beat was protected under copyright law. Understanding the core claim in this lawsuit involves going on a short musical journey. Cleveland Browne and the late Wycliffe Johnson - aka Steely & Clevie - recorded a track in 1989 called ‘Fish Market’, which is where the distinctive drum pattern originated. They then collaborated with Shaba Ranks on his track ‘Dem Bow’ in 1990, which uses the 'Fish Market' drum pattern, resulting in the percussion track being named the ‘dembow riddim’. The drum pattern was then also used by Dennis Halliburton in his track ‘Pounder Riddim’. It's mainly the ‘Pounder Dub Mix II’ version of that track that was then sampled or interpolated - “copied mathematically” according to the legal claim - by numerous reggaeton artists. That slightly convoluted journey in itself doesn’t impact on the legal claim now being made by Brown and the Johnson estate, Judge Birotte Jr also ruled this week. According to Courthouse News, he said that it “does not follow” that any defendant necessarily infringed the copyright in ‘Fish Market’ simply by copying ‘Dem Bow’, ‘Pounder Riddim’ or ‘Pounder Dub Mix II’. However, crucially, any copying of protected elements of ‘Fish Market’ would constitute infringement, regardless of whether they came from the original or one of the later tracks.

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