The international business newsletter of global music copyright

Transcription

From
The international business newsletter of global music copyright
September 8, 2010 • Issue 419
September 08, 2010
Music & Copyright
Issue 419
Contents
News
Digital lockers provide a way back into the music industry for mobile players
Major music players launch services that further blur the boundaries between producer and
provider
Decline in UMG revenues slows in 2Q10; quarter-on-quarter physical-sales growth exceeds
digital
Total collections for Czech authors’ society OSA rise 5.5% in 2009, to CZK857.7 mil.
Music-related collections for Hungarian authors’ society Artisjus up 1.7% in 2009, to HUF9.7 bil.
EMI’s revenue grows 5.2%, to £1.65 bil., but unease about debt remains
3
5
7
9
11
13
Statistics
Digital sales continue to fall in Japan
Digital sales show strong growth in Germany
UK radio listening on a set remains largely a solo activity
UN reveals big disparities across the world in broadband-access costs
Mobile music use forecast to grow in the US
Access to streaming services leads to increased music consumption and lower rates of file
sharing in Norway
16
17
18
18
19
20
Country profile: Argentina
Recorded-music sales continue to fall in Argentina; lower-priced domestic content remains
dominant
21
News
29
Editorial staff and subscriptions
32
Copyright
© 2010 Informa UK Ltd. All rights reserved.
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Ltd. This publication may not be:(a) copied or reproduced; or
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Whilst reasonable efforts have been made to ensure that the information and content of this publication was correct as at the date of first
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other inaccuracies. Readers should independently verify any facts and figures as no liability can be accepted in this regard - readers assume
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Any views and/or opinions expressed in this publication by individual authors or contributors are their personal views and/or opinions and
do not necessarily reflect the views and/or opinions of Informa UK Ltd.
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Analysis •
Digital lockers provide a way back into
the music industry for mobile players
With mobile music sales continuing to suffer in almost all of the world’s leading music markets,
digital-locker services could provide a way back into the music industry for mobile operators.
But concerns and uncertainty about licensing requirements remain.
The midyear details of recorded-music sales published in many of the world’s leading music
markets indicate that the trend of falling sales via mobile seen in the past couple of years looks set
to continue. Most developed markets experienced a sharp rise in mobile music sales several years
ago through rapid take-up of ring tones, but with this fad largely over, the decline in revenues
from ring tones has dampened overall recorded-music sales via mobile.
In Japan – the world’s most developed mobile music market – for example, unit sales of master
ring tones peaked in 1Q07 at 61.1 million, equivalent to 0.64 units per mobile subscription. In 2Q10,
the number had fallen to 34.9 million, or 0.31 per subscription. Master ring tones experienced the
largest decline of all mobile formats in 2Q10, augmenting the overall fall in mobile music sales in
Japan (see p. 16).
Internet downloads are the major source of digital spending and are offsetting weaknesses in
the mobile sector, but distinctions between the two platforms have been blurring for a while,
since many music services are available both online and via mobile. The proliferation of mobile
apps has enabled services such as streaming to become multiplatform. But it is doubtful whether
operators will be able to benefit from the app phenomenon. In a recent survey conducted by the
Economist Intelligence Unit for law firm Freshfields Bruckhaus Deringer, about 70% of mobile
operator executives surveyed said revenues from app downloads would overtake revenues from
voice services in 2013. But to achieve this, mobile operators would need to develop new pricing
models. The survey found that 55% of the executives questioned thought that the introduction of
tiered pricing was necessary in mature markets. Almost half said that flat-rate all-you-can-eat data
plans were damaging their ability to boost revenue.
But pricing models tied to data consumption and preferential bandwidth management could be
perceived by some regulators as a violation of Net-neutrality objectives. Mobile operators are in a
difficult position in that they will be required to invest in new technologies and infrastructure to
cope with the rise in traffic due to apps but might not be able to benefit financially as content
providers will through the rise in content traffic. The move by many music-service providers
toward multiplatform “cloud-based” provision could provide operators with a new revenue
stream, however.
Music Anywhere
Last month, UK mobile handset retailer Carphone Warehouse broke new ground in the cloudmusic-services sector with the launch of Music Anywhere. The service is a digital locker, in the
sense that it is designed to enable users to store their music collection in a central place on the
Internet, which can then be accessed by different devices. Although some digital-locker services
have chosen to ignore the legal status of the tracks being uploaded, Music Anywhere aims to pay
royalties for all music stored and streamed over the service. The platform provider behind the
service, Catch Media, has gone a long way toward achieving that, having secured licensing deals
with all four major labels and several indie-music aggregators before launch.
Rather than have users physically upload tracks to Music Anywhere, the service scans users’ PC
hard drives for music tracks and tries to match them with the tracks in its 6 million-strong catalog
of licensed music. If a match is found, the corresponding track in the catalog is added to the user’s
account. If a match is not found, the track on the hard disk is uploaded to a digital locker. In both
cases, the user is free to stream the tracks to Web browsers, PCs and one predefined handset
(initially just iPhone, Android and BlackBerry devices). Catch Media says it will keep a tally of
unlicensed tracks and note how often each one is streamed, so that if licensing deals can be
secured for them in future, rights holders will still receive royalties.
Users pay a flat fee of £29.99 (US$46) a year for the service when it is not bundled into the price
of handsets sold by Carphone Warehouse. A portion of subscription revenues is divided among
the rights holders on a pro rata basis, depending on how much each track has been played.
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Backup services so far
Until now, mobile players have mostly dabbled in the personal-information-management (PIM)
and user-generated-content side of cloud services, an area commonly referred to as data backup
and storage. Carphone Warehouse has launched Music Anywhere as an extension of its My Hub
backup service, where handset users can store contacts, pictures and messages. Numerous
operators have launched My Hub-type services, such as T-Mobile, which has put great focus on its
My Phonebook Backup service, and O2, which failed to get much traction for its heavily marketed
Bluebook service.
Offering services that back up subscribers’ contacts data and other PIM files along with
snapshots and videos taken on the user’s camera phone is a natural play for mobile operators. It’s
a useful service for subscribers, who don’t want to lose data if they misplace their phone and
want an easy way of porting that data when changing phone. And it’s useful for operators, as a
way of encouraging users to stick with their network. It also prevents legal complications, since
none of the content being backed up is copyrighted.
Digital-locker services are considered by some in the music industry to encourage piracy because
they make the ownership of illegally downloaded tracks more attractive by providing anytime,
anywhere accessibility through the cloud. For example, EMI is suing MP3-music-service pioneer
Michael Robertson for running music-locker service MP3tunes.com without a license.
Legitimizing locker services
Music Anywhere’s model tries to legitimize locker services in the eyes of the music industry.
Although a lot of the music “uploaded” to Music Anywhere is likely to be pirated, the service
provides a rare opportunity for the music industry to claw back some revenue from such content.
Music Anywhere’s small print says subscribers whose music collections are made up mostly of
pirated tracks might have their subscriptions terminated, however.
Determining the licensing required by digital-locker services is causing a considerable amount of
consternation. Some have suggested that uploading tracks to a centralized storage location for
streaming and downloading purposes is no different than moving content between devices in
one’s home, and that such storage services should require no license. Although companies
providing such services, such as MP3tunes, have largely taken great care to ensure that the
original uploader is the only user who can access the content, the fact that a digital copy has been
made in the process of transferring content to the locker suggests that at minimum, some sort of
mechanical license is required.
Music Anywhere has a “post-acquisition” license, which covers usage of content after it has
been acquired by the user. Although Music Anywhere is being promoted as a digital locker, much
of the content stored on a user’s PC is not uploaded but merely identified. In the case of such
tracks, a stream or download request by a subscriber is provided by a digital-service-provider
partner.
Music & Copyright understands that numerous operators are planning to follow Carphone
Warehouse’s lead and extend their data-backup and -storage services to digital -lockers. There are
reportedly a few 20-30-petabyte digital-locker deployments by major operators in the pipeline,
costing US$100-200 million.
The biggest deployments appear to be in North America, where operators have identified this
kind of service as a key part of their value-added-services strategies. In Europe, deployments are
reportedly less ambitious and are focused on testing the waters rather than a full-fledged
commitment to such services. In some ways, digital-locker services are not a natural play for
mobile players, since the vast majority of digital-media content is downloaded to and stored on
PCs. Most multimedia content on phones tends to be user-generated photos and video clips.
Role for mobile operators
But many mobile operators belong to parent firms with fixed-line subsidiaries, making a service
that converges mobile and the Internet more of a natural fit. And many mobile operators are
becoming distributors of netbooks and other PC products as part of their mobile broadband
offerings, blurring the dividing line between the mobile and PC worlds. Moreover, the “anywhere,
anytime” idea is intrinsic to mobile. In addition, the idea behind locker services is that users should
store all of their digital content in a single place, rather than have numerous backup/locker
services for specific types of content and device.
There are powerful online players, such as Google, that are looking to take on the role of central
repositories of people’s digital content. It was widely reported last week that Google would be
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launching a cloud-based music service before the end of this year. But mobile operators have a
powerful factor in their favor: user trust. It is arguable that if users are given a choice, they are
more likely to trust mobile operators than online players with their data. There are numerous
examples of online services that have shut down with little notice. By contrast, operator services
offer a greater sense of permanence and accountability.
By the same token, though, users might think twice about storing all of their content with their
operator for fear that it might stop them from churning to another operator when convenient.
Stickiness is precisely one of the factors prompting operators to deploy such services, but it’s not
necessarily what users want.
More launches inevitable
There is little doubt that digital-media cloud services such as Music Anywhere will be deployed by
mobile operators, either through the same platform provider – Catch Media – or others, such as
NewBay Software. And if they don’t sign licensing deals with rights holders, they are likely to at
least try to show more accountability for the content uploaded by users than the likes of
MP3tunes, through some kind of digital-rights management. For example, some of the platforms
targeted at operators are designed to carry out copyright checks of all content uploaded and
apply restrictions on downloading, streaming and sharing depending on the copyright owners’
rules and the operators’ business rules.
musicandcopyright@informa.com
Analysis •
Major music players launch services that
further blur the boundaries between
producer and provider
Major service announcements from Sony and Apple last week and ongoing reports of Google’s
entry into the digital-music sector have provided some insight into the future intentions of these
players. But will customer loyalty allow these services to take their success to the next level?
In what seemed like a race to be the first to announce major new services, last week Sony and
Apple provided details of new services and upgrades to current offerings. Although both
companies are major players in the music industry and the announced launches differ, both new
services take their respective companies into new areas that provide no guarantees of success.
With the usual fanfare of media attention, last week’s announcements by Apple CEO Steve Jobs
at the company’s San Francisco event was notable for the launch of iTunes 10, which comes with
new music-oriented social network Ping. According to the company, Ping enables iTunes users to
follow artists and track what music friends are listening to. Users can post comments, and the
service offers concert listings. Users can also see personalized charts based on the tracks and
albums their friends and favored artists have downloaded through iTunes. Ping is available on the
desktop PC and other Apple devices, including the iPhone and iPod touch.
To accompany the announcement of Ping, Apple provided details about a series of upgrades for
the various iPod models and a host of new sales and user details. A total of 11.7 billion tracks have
been downloaded from the iTunes Store since launch, and iTunes now has 160 million registered
accounts in 23 countries. About 120 million devices based on iOS – the operating system for the
iPad, iPod Touch and iPhone – have been sold, and 6.5 billion apps have been downloaded from
the Apple’s App Store.
But it is the launch of Ping that has summoned the most interest. During his presentation, Jobs
mentioned Facebook and Twitter. Ping differs considerably from those two in that it is accessible
only via iTunes and is solely based on music, but in mentioning the two leading social networks
Jobs was perhaps indicating how relevant Apple would like Ping to become.
Despite the impressive number of iTunes account holders, Ping is likely to remain a long way
behind Facebook and Twitter in terms of user numbers for quite a while. But by bundling a
recommendation and social-networking service with software that makes buying music a simple
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process, Ping might play a major part in maintaining iTunes’ position as the world’s leading digitalmusic store. According to Apple, more than 1 million iTunes users signed up to Ping in the first two
days, equating to one-third of those who downloaded iTunes 10.
Sony’s Music Unlimited
In contrast to Apple, Sony has for several years attempted to position itself as a digital-music
retailer, with little success. Sony’s Connect online music service went through several redesigns in
an attempt to replicate iTunes’ user-friendly experience. Even though Sony engaged in
restructuring to provide closer links between the Connect store and its MP3 Walkman players,
Connect was closed in 2007.
Sony has also fallen behind Apple in the portable music player (PMP) sector, having led for a
number of years with its Walkman series of music players. Despite sporadic success in Japan for
the Walkman over the iPod, the iPod remains the leading PMP in most markets. According to
Japanese research company BCM, Walkman sales exceeded those of the iPod in Japan last month,
taking a 47.8% share in the month, compared with 44% for the iPod. But this was most likely due to
awareness among Japanese users that Apple’s annual upgrade of its iPod range was imminent.
IPod sales often slow down a month or so before upgrade announcements.
Just a day after the Apple event, Sony announced at the IFA 2010 show in Berlin a music and
movie store, Qriocity. Details were limited, but the Sony service uses a model similar to Apple’s,
catering to the company’s base of users with network-enabled Bravia TVs, Blu-ray players,
PlayStations, Vaio computers and, potentially, Sony Ericsson devices. According to Sony, premium
streaming-video service Video On Demand Powered By Qriocity will be available this fall in France,
Germany, Italy, Spain and the UK. The service has been available in the US since April and provides
access to movies from all of the leading movie studios. Before the end of the year, Sony is looking
to introduce Music Unlimited Powered By Qriocity, a cloud-based digital-music service, which will
initially be available via the same series of devices as the VOD service. The likely intention is to
extend access to Sony’s portable devices, an essential feature if the service is to gain any traction.
Precise details for the Music Unlimited service – such as pricing, features, availability and content
– are set to be provided later this year. All Sony said at the launch was that the service would
“give music lovers access to millions of songs stored and synchronized through the cloud.”
Google Music before the end of the year?
Google is also expected to launch a cloud-based music service before the end of the year. Unlike
Apple’s and Sony’s new product launches, news of a Google music service has not been the
subject of any grand announcement, merely rumor and speculation. At the end of last month, it
was widely reported that Google was in the process of looking for a music-industry executive to
head the new service. Last week, Reuters reported that Google was in talks with music companies
to secure licensing terms for a download store and a digital-locker service. Citing a source close to
the company, Reuters said that Google was hoping to have the service “up and running by
Christmas.”
Agreeing on licensing deals for a download service should be a relatively straightforward
procedure compared with the deals required for a locker service, since there is much conjecture
as to precisely what licenses are required for such services (see page 3). But the music companies
see that Google has real potential to eat into Apple’s digital-market share, something several highprofile digital-music retailers have failed to achieve.
Google is already a familiar name to PC users. Its share of the US search-engine sector was 81% in
July, according to US-based Chitika Research (see fig.). It is similarly dominant in much of Europe.
Google is also likely to tie the service into its Android mobile platform. According to Reuters and
Google, about 200,000 Android-based mobile handsets are sold every day. According to marketresearch company iSuppli, Android will be used in 75 million smart phones by 2012, up from 5
million in 2009, equating to a 19.4% share of the global smartphone-OS market, up from 2.7% in
2009. There are expected to be 62 million iOS devices in use in 2012, up from 25 million in 2009,
equating to a 15.9% share, up from 13.8%.
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US, search-engine market shares, Jan-Jul 10 (%)
Jan-10
Feb-10
Mar-10
Apr-10
May-10
Jun-10
83.6
84.4
85.1
84.2
83.8
81.5
81.0
Bing
7.8
7.2
7.1
7.8
8.5
11.3
10.6
Yahoo
Google
Jul-10
6.6
6.3
5.7
5.8
5.5
4.9
6.1
AOL
1.2
1.2
1.2
1.2
1.2
1.2
1.2
Ask
0.9
0.9
1.0
1.1
1.1
1.1
1.1
Source: Chitika
Moving out of the comfort zone
Despite differences in the three major companies’ offerings, there is one common theme running
through the three: an effort to extend what has been a success in one sector into another.
Although each new product launch is part of a natural progression, there are no guarantees that
dominance in one sector will result in similar achievements in another. At the same time as Apple
announced the launch of Ping, it also relaunched its Apple TV service. Apple has yet to convert its
dominance in music into TV, and its content offering still stacks up poorly compared to the likes of
Sony’s PlayStation 3 and connected TVs.
And Sony has not been able to convert its position as the second-largest recorded-music
company in the world into success in music retail. To a lesser extent, Google has not managed to
profit from the success of online-video service YouTube, though some analysts have said that the
service – whose revenues have been doubling each year for the past three years – will finally
become profitable this year.
What is clear with these major initiatives is that the digital-music sector, which has stuttered in
some of the world’s largest music markets, is experiencing a renewed push, which could move the
sector closer to realizing a potential that has been often talked about but has so far proved
elusive.
Analysis •
Decline in UMG revenues slows in 2Q10;
quarter-on-quarter physical-sales
growth exceeds digital
Revenues for UMG decreased 5.4% year-on-year in the first six months of this year. Although a
light release schedule and reduced demand for physical product were cited as the main reasons
for the decline, revenues from physical sales for the second quarter of this year actually grew
15% compared with the first quarter.
New financial details published by French media group Vivendi show that the decline in revenues
for its music division, UMG, slowed in the second quarter of this year. For the period between
April and June, UMG revenues increased 2.8%, to €1.01 billion (US$1.29 billion), from €983 million in
2Q09 (see fig. 1). However, because of the poor performance in the first three months of this
year, when revenues fell 13.4% year-on-year, total revenues between January and June were down
5.4% (7.9% at constant currency rates), to €1.9 billion (see fig. 2).
Despite reporting strong growth in merchandising sales and increased digital sales, Vivendi said
that a drop in the number of major local and international releases and reduced demand for
physical product were largely responsible for the overall decline. However, in 2Q10, revenues from
physical sales were actually up 15.1% compared with 1Q10. Moreover, the quarter-on-quarter
growth of €61 million in physical revenues exceeded the €27 million rise in digital sales. Because of
this, the share of recorded-music revenues taken by physical sales increased slightly in 2Q10, to
57.5%.
Vivendi reported that digital sales for the first six months of this year were up slightly (1% at
constant currency rates), with strong download growth offset by a decline in ring-tone sales.
However, for 2Q10 the year-on-year growth was higher, at 10.4%. Digital’s share of 2Q10 revenues
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stood at 31.5%. Licensing and other accounted for the remaining 11%. Vivendi said that licensing and
other income was down for 1H10, because of several nonrecurring items in 2009.
Fig. 1: UMG, quarterly revenue and EBITA details
Revenues
1,508
Revenues/EBITA (€ mil.)
1,600
1,200
EBITA
1,011
1,098
1,385
1,026
983
969
1,011
889
800
400
311
278
149
148
110
101
58
68
91
1Q10
2Q10
0
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
Note: €1=US$1.27
Source: Vivendi
Fig. 2: UMG, financial details, 1H09 and 1H10
Change
Share of total revenues
(€ mil.)
1H09
(€ mil.)
1H10
(US$ mil.)
(%)
(%)
Physical
973
867
1,154
-13.8
45.6
Digital
467
481
640
1.0
25.3
License and other
204
176
234
-15.5
9.3
1,664
1,524
2,028
-9.8
80.2
Revenues
Total recorded music
Artist services and merchandising
Music publishing
Intercompany elimination
Total revenues
EBITA
85
103
137
15.1
5.4
306
295
393
-6.4
15.5
26
22
29
-
1.2
2,009
1,900
2,528
-7.9
100.0
211
159
212
-28.0
-
Note: Change is calculated at constant currency-exchange rates
Source: Vivendi
Lady Gaga continues to prove highly successful for UMG, with two of her albums among the five
best-sellers for the year (see fig. 3). Breakthrough artist Justin Bieber continued to sell well. UMG
is expected to benefit from its long-term agreement to market, promote and distribute American
Idol musical artists. UMG will have right of first refusal on the TV show’s 12 finalists. Previously
SME distributed artist releases from the TV show. Reports have estimated that American Idol has
generated US$400-600 million in music sales since it was first screened in 2002.
Fig. 3: UMG, best-selling artists, 1H10 (units mil.)
Lady Gaga (The Fame Monster)
3.4
Black Eyed Peas
1.9
Justin Bieber
1.9
Eminem
1.8
Lady Gaga (The Fame)
Total top 5
1.1
10.1
Source: Vivendi
Revenues for UMG’s music-publishing division, UMPG, were down 6.4% at constant currency
rates, to €295 million, in the first half of this year. Vivendi said that weakness in the US market was
the main reason for the fall. However, for the second quarter specifically, publishing revenues
were up slightly quarter-on-quarter and year-on-year (see fig. 4). For the first six months of this
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year, UMPG revenues accounted for 15.5% of UMG’s total, compared with 15.2% in 1H09. Last
month UMPG acquired the music-publishing assets of Christian music company Maranatha Music.
Fig. 4: UMG, quarterly recorded-music and publishing revenues, 2Q08-2Q10
Physical
Digital
License and other
Publishing
1,000
900
Revenues (€ mil.)
800
700
600
500
400
300
200
100
0
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
Source: Vivendi
In separate news, UMG short-form animated series Uki was acquired by the BBC’s digital
children’s channel CBeebies last month. The show was created by Patrick Busschots and Peter
Decraene from UMG’s Belgium office and, having won the Pitch It award at Kidscreen 2008, was
launched at international TV conference MIP Junior last year. In Belgium it airs on Ketnet and Club
RTL. In the UK it will air as a segment on CBeebies Show Me Show Me series later this month. BBC
Worldwide is handling international sales, and it has already been sold to unnamed broadcasters
in Australia, Portugal, Finland, Norway, Poland, Israel, South Africa, Taiwan, the Middle East and
Southeast Asia.
Analysis •
Total collections for Czech authors’
society OSA rise 5.5% in 2009, to
CZK857.7 mil.
In contrast to last year’s fall in recorded-music sales in the Czech Republic, authors’ rights
collections increased 5.5% in 2009. Distributions to members were also up, while costs as a share
of collections remained steady.
Czech authors’ society OSA has reported that total collections increased 5.5% year-on-year in 2009,
to CZK857.7 million (US$45.4 million) (see fig. 1). The increase compared with rises of 15.3% in 2008
and 11.7% in 2007. In its annual report, OSA Chairman Roman Cejnar noted that despite a fall in
collections from several income sources, the figure rose last year because OSA completed
negotiations with major TV broadcasters concerning royalty rates, established a new model of
cooperation with cable TV operators and successfully defended authors’ rights for use of OSAmember music in accommodation facilities.
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Fig. 1: OSA, collections and distributions by source, 2008 and 2009
2008
2009
(CZK 000s)
(CZK 000s)
General performance
137,925
Live
86,536
Change
(US$ 000s)
(%)
166,471
8,821
20.7
86,533
4,585
0.0
5,457
6,335
336
16.1
229,918
259,339
13,742
12.8
27,280
57,312
3,037
110.1
257,198
316,651
16,779
23.1
-0.8
Collections
Public performance
Cinema
OSA total
Collections for Dilia, OOA-S and Integram
Total public performance
Broadcasting and online media
Radio
80,988
80,357
4,258
TV
139,971
169,546
8,984
21.1
12,983
23,702
1,256
82.6
Internet
2,749
6,076
322
121.0
Ring tones
4,798
5,846
310
21.8
241,489
285,527
15,130
18.2
68,014
53,450
2,832
-21.4
5,916
6,297
334
6.4
Production and import (copying machines)
33,008
25,976
1,376
-21.3
Production and import (empty carriers)
57,082
44,424
2,354
-22.2
902
1,103
58
22.3
6,500
5,245
278
-19.3
Total for OSA
171,422
136,495
7,233
-20.4
Collections for Dilia, OOA-S and Integram
46,198
35,797
1,897
-22.5
Total mechanical and audiovisual
217,620
172,292
9,130
-20.8
Foreign
69,508
65,167
3,453
-6.2
27,341
18,041
956
-34.0
Total collections
813,156
857,678
45,448
5.5
Costs
129,581
137,912
7,308
6.4
15.9
16.1
16.1
0.2*
246,203
265,354
14,061
7.8
181,426
199,452
10,569
9.9
Cable TV
Total broadcasting and online media
Mechanical and audiovisual
Audio and music video sales
Sales of film videos
Production of AV works and spots
Other use
Other
Costs as share of collections (%)
Distributions
Authors
Publishers
Other
Foreign
Total distributions
6,705
9,276
492
38.3
158,154
148,468
7,867
-6.1
592,488
622,550
32,989
5.1
*Percentage points
Source: OSA
Public performance was the largest income source last year, accounting for 36.9% of total
collections, up from 31% in 2008 (see fig. 2). Although all subsectors in this category experienced
an increase in 2008, some were down in 2009, most notably “discos, video productions and
clubs” and collections from popular-music concerts. Overall, live-music collections were
unchanged because of growth in collections from classical-music performances and dance parties.
The public-performance source experiencing the largest growth was “rooms in accommodation
facilities,” which rose to CZK47.2 million last year, from CZK15.5 million in 2008. The sharp increase
was due to an amendment in the Czech Copyright Act in May 2008 that retroactively imposed the
obligation to pay royalties for radio and TV broadcasting of works in accommodation facility
rooms from 2005 onward. Before the amendment, OSA had been involved in litigation over the
validity of the obligation to pay royalties. OSA’s claim to royalties under the previous thenapplicable law was confirmed by a judgment at the Czech High Court in Prague, in a case brought
by OSA against a hotel proprietor.
Total royalties collected for broadcasting and online media rose 18.2% in 2009, to CZK285.5
million. OSA reported that the overall positive result was due to “better contractual terms
governing TV broadcasting, cable transmissions and the Internet.” In contrast to many other
European countries, which have seen collections from ring tones decrease, OSA’s ring-tone
collections were up almost 22% in 2009, to CZK5.8 million. However, income from radio stations
declined for the third consecutive year, largely because of the fall in advertising revenues.
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Overall collections for mechanical and audiovisual rights were down almost 21%, to CZK172.3
million. OSA said that the fall reflected the decline in the sale of both recorded music and blank
recording media. Another factor was the amendment to the Ministry of Culture Decree that
reduced rights remuneration for memory media, such as hard disks and memory sticks.
Distributed royalties increased to CZK622.6 million last year, from CZK592.5 million in 2008. Local
authors accounted for 42.6% of the total. However, distributions to foreign authors were down
6.1%, to CZK148.5 million. At the beginning of this year, OSA represented 6,426 copyright holders.
Fig. 2: OSA, collections by source, 2009
Foreign 7.6%
Mechanical and
audiovisual 20.1%
Other 2.1%
Public performance
36.9%
Broadcast and online
33.3%
Source: OSA
Analysis •
Music-related collections for Hungarian
authors’ society Artisjus up 1.7% in 2009,
to HUF9.7 bil.
Despite ongoing falls in recorded-music sales and tough trading conditions for music users in
Hungary, Hungarian collection society Artisjus has reported growth in its music-related
collections for last year. However, the society has said that digital collections remain hampered
by record companies’ reluctance to license content to local digital services.
Total royalty collections by Hungarian authors’ society Artisjus stood at HUF13.16 billion (US$65.8
million) in 2009, up 0.5% from HUF13.1 billion in 2008 (see fig. 1). Total music-related collections
registered higher growth, rising 1.7%, to HUF9.67 billion. In addition to higher royalties, Artisjus
also reported that distributions this year, which are based on last year’s collections, will be about
5.8% higher than distributions made in 2009.
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Fig. 1: Artisjus, collections by source, 2008 and 2009
2008
2009
Change
(HUF 000s)
(HUF 000s)
(US$ 000s)
(%)
Public performance
4,856,759
4,833,793
24,169
-0.5
Radio and TV
2,529,199
2,855,159
14,276
12.9
89,503
87,344
437
-2.4
1,212,267
1,162,311
5,812
-4.1
307,615
248,570
1,243
-19.2
35.8
Digital
Cable TV*
Mechanicals
Literary works broadcasting royalties
92,785
126,002
630
9,088,128
9,313,179
46,566
2.5
416,549
352,838
1,764
-15.3
Total music-related collections
9,504,677
9,666,017
48,330
1.7
Nonmusical and neighboring rights
3,176,088
3,104,112
15,521
-2.3
Total domestic collections
Foreign
Cable TV royalties for foreign broadcasters
Grand total
415,340
389,340
1,947
-6.3
13,096,105
13,159,469
65,797
0.5
*Includes private-copying remuneration
Source: Artisjus
The largest collection source for Artisjus is public performance. Despite a slight fall in collections
from this source, it still accounted for half of music-related collections in 2009 (see fig. 2). Artisjus
reported that music users’ “readiness to pay” performance fees deteriorated in 2009. Thirteen
percent more payment notices were sent out in 2009 than in 2008. Artisjus also said that it
applied for 14,420 court orders, 477 of which resulted in lawsuits being issued against nonpayers.
Fig. 2: Artisjus, music-related collections by source, 2009
Mechanicals 2.6%
Other 2.2%
Foreign 3.7%
Cable TV* 12.0%
Public performance
50.0%
Radio and TV 29.5%
Source: Artisjus
Collections from radio and TV broadcasters were up 12.1%, to HUF2.86 billion, last year. According
to Artisjus, the growth was largely due to greater efficiency in broadcast collecting and to arrears
in payments from 2008 following several audits of a number of broadcasters. But similar growth is
unlikely this year, because of the decline in broadcasting-related advertising revenues, which form
the basis for royalty payments for commercial broadcasters, and because of the closure at the
end of last year of the two largest commercial radio broadcasters, Danubius and Slager. Artisjus
reported that the rise in the number of TV channels carried by cable operators was largely
responsible for the 11.6% rise in cable-TV collections.
Digital collections were down 2.4% last year and still account for a small share of the overall
collection total. Although Artisjus said that it was hopeful that revenues from subscription
services would increase in 2010, it complained that the telecoms companies offering subscriptions
were hampered by the refusal of a large number of record companies to make their content
available. Artisjus also reported that a la carte retailers have not been able to gain a foothold in
the digital-music sector. Two services – mp3music.hu, operated by CLS Records, and Track.hu,
operated by online-service provider Origo – both closed last year because of low sales. No major
international download services have extended their coverage to Hungary. Artisjus said that it had
negotiated with Sony Ericsson about the possible launch of SE’s Play Now Plus service, but after
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they reached an agreement on royalties, Sony Ericsson decided against offering the service in
Hungary.
Despite these setbacks, Artisjus remains positive about the digital sector. The authors’ society is
teaming up with Hungarian neighboring-rights societies EJI and MAHASZ to initiate royalty
negotiations with service providers to support the possible launch of online-music services. Last
year Artisjus began negotiating with the two societies to establish a common database and
licensing-application process.
Collections from the sales of hard-format soundcarriers and blank recording media continue to
decline because of lower sales. Mechanical collections were down 19.2% in 2009, following a yearon-year decline of 26.3% in 2008. Income from private copying decreased 1.3% last year, a
significant improvement on the 16% decrease in 2008. Artisjus suggested that the slowdown could
have occurred because private-copying remuneration was added to new types of carriers, such as
settop boxes and mobile handsets with music-playback facilities offered by GSM service
providers. Nokia has challenged the addition of private-copying remuneration to its handsets.
However, earlier this year Artisjus won a similar case brought by Samsung. Artisjus is confident
that it can achieve the same result against Nokia, especially because a Hungarian court denied
Nokia a request to refer the case to a European court.
In an effort to increase efficiency in the collection and distribution of live-music revenues, in
November 2009 Artisjus launched KoncertOnline, an online registration service for artists and
promoters, who can use the service to notify the authors’ society of all relevant data regarding a
performance, including details of the works performed. By May, 88 promoters and 207
performers were registered.
Artisjus ended last year with 1,713 members, up from 1,683 at the beginning of the year.
Analysis •
EMI’s revenue grows 5.2%, to £1.65 bil.,
but unease about debt remains
Maltby Capital, the holding company of EMI, has reported an increase in revenue for the
recorded-music and publishing divisions of the major for the 12 months to end-March. But
despite a reduction in net losses, high levels of debt and future lending requirements remain a
concern.
The annual operating-performance report published last month by Maltby Capital, the Terra
Firma-owned holding company of EMI Group, showed growth in revenue and EBITDA for both
EMI’s recorded-music and publishing divisions. The announcement by a major music company of
increased revenues at a time when recorded-music sales are still falling in some of the world’s
largest markets could mean a reason to celebrate for the music industry.
Overall, EMI Group’s revenue was up 5.2% year-on-year in the 12 months to end-March, to £1.651
billion (US$2.64 billion) (see fig.). EBITDA was up 14%, to £334 million. But unlike the other three
major music-company groups, EMI has operated under a debt cloud of more than £3 billion since
its acquisition by Terra Firma in 2007. Moreover, although EMI generates enough revenue to pay
the interest on its debt, an ongoing set of banking covenants that formed part of the lending
agreement signed during the acquisition will tighten steadily over the coming years, according to
Maltby Capital.
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EMI financial data, FY09 and FY10
FY09
FY10
Change
(£ mil.)
(£ mil.)
(US$ mil.)
(%)
1,569
1,651
2,636
5.2
293
334
533
14.0
Revenue
1,101
1,173
1,873
6.5
EBITDA
160
184
294
15.0
Revenue
468
478
763
2.1
EBITDA
133
150
239
12.8
EMI Group
Revenue
EBITDA
EMI Music
EMI Music Publishing
Note: EMI's fiscal year is the 12 months to end-March.
Source: Maltby Capital
Unsurprisingly, the company’s annual review had an upbeat tone. Maltby Capital’s recently
appointed chairman, Stephen Alexander, stated that in spite of the ongoing financial problems,
both divisions of EMI showed “marked progress in their underlying performance during the
course of the last twelve months.” He also said that the market shares of EMI Music and EMIMP
were up year-on-year.
The report described the success of the Beatles’ remastered catalog of original albums as “an
unprecedented success selling over 10 million albums in the year.” Such high sales probably
inflated the company’s recorded-music market share – though only its physical-sales share, since
the albums were not available digitally – and a repeat of the success is unlikely for the current
financial year. But some new artists also sold well. Among these is Katy Perry, who has sold about
6 million albums, and Lady Antebellum, whose most recent release, Need You Now, is likely to end
this year as one of the best-selling albums in the US.
A comparison of EMI’s financial details with the other three majors’ recent statements also puts
EMI in a good light. SME is the only major that operates on the same fiscal year, the 12 months to
end-March. In May, it reported that total pro forma revenue in FY10 was down 5% year-on-year to
¥522.6 billion (US$5.62 billion) (see M&C 412/13). SME’s sales were up 1.3% year-on-year in 2Q10, at
¥110.3 billion (see M&C 418/10).
UMG, whose fiscal year ends in December, saw its revenue drop 6.2% year-on-year in FY09, to
€4.36 billion (US$6.07 billion) (see M&C 408/8). In 1H FY10, UMG’s revenue was down 5.4% year-onyear, at €1.9 billion, though sales were up 2.8% year-on-year in 2Q FY10 alone (see p. 7).
WMG, whose financial year ends in September, reported a 9% year-on-year fall in total revenues
in FY09, to US$3.18 billion. WMG saw a mixed performance between October and June and its
revenue was down 4.2% year-on-year in the period, at US$2.23 billion.
EMI has also experienced a gain in market share this year in the US and UK. According to Nielsen
SoundScan, EMI’s share of US album and track-equivalent album sales rose to 9.97% in the six
months to end-June, from 8.58% in the same period in 2009. In 2Q10, EMIMP took a 21.4% share of
the 100 songs with the most airplay in the US, the first time its share had been above 20% since
1Q08, according to trade magazine Billboard. In the UK, EMIMP was the largest publisher in 2Q10,
with a combined share of album and singles sales of 22.5%, up 2% year-on-year, according to UK
trade magazine Music Week.
Dealing with the debt
But despite this good news, losses at EMI remained high in FY10, at £512 million, though this was
down from a net loss of £1.57 billion in FY09. The company also incurred an impairment charge of
£602 million, down from the previous year’s charge of £1.04 billion. EMI also must repay £3.04
billion of debt between 2014 and 2017, and the report says the company will need to receive
additional funds “when required” so that it can meet its banking covenants. In June, Terra Firma
injected £105 million in equity funding to meet the March 2010 covenant tests for EMI Music, and
Maltby Capital stated in its review that more such moves will be required, “particularly in March
2011.”
EMI also faces a major deficit in its pension program, which the report says has a deficit of £115217 million, higher than Maltby Capital’s previous estimates. According to the report, EMI has been
in discussions with the trustees of the EMI Group Pension Fund regarding contributions to the
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fund, but since no agreement has been reached on a long-term funding policy, the pension
regulator has referred the matter to its determinations panel to determine the size of the deficit
and the number of years over which it must be repaid.
The report also said that Terra Firma was maintaining an “ongoing dialogue” with its principal
lender, Citigroup. Relations between the firms soured in December, when Terra Firma accused
Citigroup of acting illegally to inflate the price of EMI’s acquisition. The two are due to face each
other in a New York court in October. According to the Financial Times talks to resolve the dispute
collapsed earlier this month making an early resolution of the case very unlikely.
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Statistics •
Digital sales continue to fall in Japan
New digital-sales figures published by the Recording Industry Association of Japan (RIAJ) show
that total unit sales and the value of digital-music trade revenues fell in the second quarter of this
year compared with the same period in 2009. Overall unit sales were down 4%, to 110.5 million,
with trade revenues from digital sales also falling 4%, to ¥21.4 billion (US$232.1 million) (see fig. 1).
Fig. 1: Japan, digital-music sales, 2Q10
Internet downloads
Units
YOY change
(000s)
(%)
(¥ mil.)
(US$ mil.)
(%)
10,238
-2
1,463
15.9
-8
659
14
745
8.1
6
10,897
-1
2,208
24.0
-4
472
20
134
1.5
10
4
-
1
0.01
-
11,373
0
2,343
25.4
-3
Ring tones
34,916
-12
3,581
38.9
-13
Ring-back tones
28,372
4
2,485
27.0
4
Single track
33,994
-2
11,842
128.6
-1
Music video
1,638
-15
639
6.9
-8
175
-41
162
1.8
9
99,094
-5
18,709
203.2
-3
-
-
115
1.2
-42
-
-
89
1.0
-7
29
97
119
1.3
12
110,496
-4
21,376
232.1
-3
Source: RIAJ
Single track
Album
Total audio
Value
YOY change
downloads
Music video
Other
Total Internet
Mobile digital content
Other mobile
Total mobile
Other
Subscriptions
(Internet)
Subscriptions
(mobile)
Other
Grand total
Grand total
The 2Q10 figures followed a similar downward pattern in 1Q10. Mobile sales still dominate the
Japanese digital-music sector, accounting for 89.7% of the second quarter’s unit sales and 87.9% of
total digital trade revenues. Single tracks accounted for 63% of mobile trade revenues in the latest
three months, with ring tones taking a 19% share (see fig. 2). Single-track sales also dominated
Internet sales, taking a 59.3% share of total Internet trade revenues (see fig. 3).
Fig. 2: Japan, digital-sales value via mobile by format, 2Q10
Subscriptions 0.5%
Other 0.9%
Music video 3.4%
Ring-back tones
13.2%
Single track 63.0%
Ring tones 19.0%
Source: RIAJ
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Fig. 3: Japan, digital-sales value via Internet by format, 2Q10
Music video 5.9%
Subscriptions 4.7%
Single track 59.3%
Album 30.2%
Source: RIAJ
Statistics •
Digital sales show strong growth in
Germany
New figures published by German trade association Bundesverband Musikindustrie (BVMI) show
strong growth in the sale of digital singles and albums in the first half of this year. BVMI said that
overall digital sales were up 39.1% in value and 25.4% in units compared with 1H09 (see fig.).
According to BVMI, the main driver of the growth was strong sales of digital music albums, which
increased more than 50% in both value and unit terms. BVMI said that album sales in the latest sixmonth period were 800% greater than five years ago, with singles sales up 350%. Stefan Michalk,
CEO of BVMI, said the competition in Germany was more intense than in other countries because
Germany has more than 40 digital-music services.
Germany, digital music sales in 1H09 and 1H10
Albums
Singles
Total
1H09
1H10
3.1
4.7
51.6
Value (€ mil.)
27.6
41.6
50.7
Units (mil.)
22.9
27.9
21.8
Value (€ mil.)
24.2
30.4
25.8
Units (mil.)
26.0
32.6
25.4
51.7
72.0
39.1
Units (mil.)
Value (€ mil.)
Change (%)
Note: €1=US$1.27
Source: BVMI
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Statistics •
UK radio listening on a set remains
largely a solo activity
A new report published by UK telecoms regulator Ofcom has found that listening to audio via a
radio set is largely done as a solo activity and not concurrent with any other activities. According
to Ofcom’s latest annual Communications Market Report, 81% of time spent listening to the radio
was undertaken as a “solus” media activity, with just 19% concurrent with other communications
activities, such as surfing the Internet (see fig.). In contrast, the consumption of radio via a PC was
found to be much more likely done in combination with other media. The report also said that
about two-thirds of time spent downloading audio was conducted while accessing other media.
Other notable findings included a decline in the number of consumers engaging in media activities
other than via the TV, Internet and mobile phone. Also, listening to music on a stereo/CD or tape
player has fallen and has not been replaced by the use of portable music devices/MP3 players.
UK, proportion of time spent listening to audio, alone vs. simultaneous
On its own
While using other media
Radio on a radio set
81%
Live radio on a TV set
69%
Music/audio on a home music system
31%
61%
Downloaded audio/CDs on a PC
Radio live or on-demand on a PC
19%
39%
38%
17%
62%
83%
Source: Ofcom
Statistics •
UN reveals big disparities across the
world in broadband-access costs
Figures published by the International Telecommunications Union, the United Nations agency for
information and communication technology, have revealed a massive disparity in fixedbroadband-access costs relative to average monthly income. According to the ITU, the Central
African Republic is the most expensive place for fixed-broadband access, with costs at end-2009
equivalent to nearly 40 times the country’s average monthly income (see fig. 1). Taking into
account the cost of landlines and mobile access, Niger is the most expensive country. In contrast,
the Chinese administrative region of Macao was the cheapest, with the cost equivalent to just
0.3% of average monthly income (see fig. 2). The UN 2010 Millennium Development Goals Summit,
slated to meet in New York later this month, has set targets to reduce global poverty and improve
living standards by 2015.
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Fig. 1: Fixed-line-broadband cost as proportion of monthly income, top five countries, 2009
Rank
Country
Price as % of avg. monthly income
Broadband subs per 100 inhabitants
1
C. African Rep.
3,891
No data
2
Ethiopia
2,085
No data
3
Malawi
2,038
0.02
4
Guinea
1,546
No data
5
Niger
967
0.01
Source: ITU
Fig. 2: Fixed-line-broadband cost as proportion of monthly income, bottom five countries, 2009
Rank
Country
1
Macao
Price as % of avg. monthly income
0.30
Broadband subs per 100 inhabitants
23.42
2
Israel
0.33
25.80
3
Hong Kong
0.49
29.34
4
US
0.50
27.10
5
Singapore
0.58
23.71
Source: ITU
Statistics •
Mobile music use forecast to grow in
the US
Figures published by market-research firm eMarketer forecast that mobile content revenue will
rise from just under US$1.15 billion in 2009 to more than US$3.53 billion in 2014, equating to a
compound annual growth rate of nearly 20% over the period. The fastest growth is expected to
come from mobile music, which is forecast to start from the smallest base, and the market is
expected to move from a focus on ring tones to one in which mobile broadband users pay to
access full-length songs from the “cloud.” EMarketer has forecast that total mobile music
revenue will rise to US$676.5 million in 2014, from just US$82 million in 2009 (see fig.). The number
of mobile music users is expected to reach 52.2 million in 2014, compared with 12.9 million in 2009.
US, mobile music forecasts 2009-2014
2009
2010
2011
2012
2013
2014
Mobile music revenue (US$ mil.)
82.0
143.2
261.2
413.6
568.5
676.5
Mobile music listeners (mil.)
16.2
21.7
29.2
37.3
45.6
52.2
As % of mobile users
6.8
8.8
11.6
14.6
17.6
19.8
As % of population
5.3
7.0
9.3
11.8
14.3
16.2
Source: eMarketer
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Statistics •
Access to streaming services leads to
increased music consumption and lower
rates of file sharing in Norway
According to a survey conducted by Norstat on behalf of Norwegian streaming-music-service
provider Aspiro Music, greater access to and use of streaming services leads more people to listen
to music. The study also found that streaming users listen to a significantly greater range of music
than non-streaming users. According to the study, conducted in June, 31% of Norwegians have
streamed music (see fig.), and in the 25- to 29-year-old demographic, the figure rose to 70%. The
difference between women and men was notable, with 43% of men and only 19% of women having
streamed music. There was also a big difference between urban and rural areas, with 46% of urban
residents having used streaming services, compared with 21% of rural residents. The survey
provided evidence that streaming services could have a major part to play in reducing illegal filesharing activity, finding that 54% of respondents who used streaming services were former illegal
downloaders.
Norway, share of population that has streamed music
Don't know 21%
Yes 31%
No 48%
Source: Aspiro
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Country profile •
Recorded-music sales continue to fall in
Argentina; lower-priced domestic
content remains dominant
Data box: Argentina
Sources: Informa Telecoms & Media, IFPI
Of all the leading Latin American music markets, Argentina has experienced the most turbulence
in recorded-music sales in recent years. Financial problems and rising digital piracy have made
conditions tough for the local music industry, and there appears to be no letup, with trade
association CAPIF reporting a continued fall in sales this year.
Argentina ended 2009 as the third-largest market in Latin America for recorded-music sales,
according to global trade association the IFPI. Although the country trails Brazil and Mexico
regarding the overall sale of music, it has a higher per capita music-spending rate, which last year
stood at US$2.32. That figure compared with US$1.70 for Mexico and US$1.49 for Brazil. However,
the promise shown by Argentina of sustained music sales in the middle of the 2000s has shown
signs of stuttering.
Inevitably, the global financial crisis has affected Argentina, which endured a period of economic
recession and slow recorded-music sales last year. In the last lengthy period of negative growth in
Argentina, in 2001 and 2002, recorded-music sales plummeted. The difference between the latest
economic crisis and the one experienced at the beginning of the decade is that Argentina has
made a quick recovery. GDP growth last year was below 1%. Earlier this year the government
forecast growth of about 2.5% for 2010. But the strong performance of some industrial sectors has
resulted in a substantial upward revision to 7%. The Economic Commission for Latin America and
the Caribbean (ECLAC) has estimated that Argentina’s growth will be 6.8%. ECLAC says growth will
be helped by Argentina’s membership in the Southern Common Market (Mercosur). The other
members of the group – Brazil, Paraguay and Uruguay – have all coped well after experiencing
economic difficulties.
The Economist Intelligence Unit (EIU) has echoed ECLAC’s forecast for 2010 but is expecting
slower growth, of around 4%, for 2011. Argentina is scheduled to hold presidential elections in
October 2011, and the EIU says that investors might experience “jitters” in the period leading up
to the elections. Inflation is also expected to rise, resulting in a weakening of private-consumption
growth.
Music sales
Analyzing recorded-music sales in Argentina and how they are likely to develop requires a look
back at the previous decade. According to the IFPI, total trade revenues from recorded-music
sales were down 1.9% last year, to US$52.7 million, from US$53.7 million in 2008 (see fig. 1). At the
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turn of the century, music sales were badly hit by the economic recession. Total unit sales of
physical soundcarriers dropped from 24 million units in 1999 to just 6.2 million in 2002, equal to a
fall of almost 75% (see fig. 2). Between 2003 and 2007, unit sales grew sharply, coinciding with a
period of economic stability. However, although unit sales rose more than 190% in the period, they
never returned to 1999 levels.
Fig. 1: Argentina, recorded-music trade revenues by source, 2007-2009 (US$ mil.)
Physical
2007
2008
2009
47.8
46.3
42.4
-8.4
1.6
2.4
3.8
58.3
Digital
Total recorded music
Change (%)
49.4
48.7
46.2
-5.1
Performance rights
4.0
5.0
6.6
32.0
Total music
53.5
53.7
52.7
-1.9
Source: IFPI
Fig. 2: Argentina, physical-recorded-music sales, 1999-2009 (units mil.)
30
25
20
15
10
5
0
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Source: CAPIF
In the past couple of years, physical-soundcarrier sales have been competing against growing
levels of illegal online file sharing and a small but growing legitimate digital market. Such
pressures, coupled with the global trend of music sales moving from hard formats to digital, are
likely to result in a situation in Argentina in which physical-soundcarrier sales do not return to the
peak years of the late 1990s, despite attempts by trade association Chamber of Record Producers
(CAPIF) to bolster physical sales with a variety of initiatives. One such initiative took place last
October. On Record Store Night, several music stores in the capital, Buenos Aires, stayed open
later and staged live concerts. A similar promotion is set to take place next month.
Physical sales have continued falling this year. According to CAPIF, the retail value of hardformat-soundcarrier sales for the period January to July 2010 decreased 21.8% year-on-year, to
ARS152.6 million (US$39.5 million) (see fig. 3). No physical format experienced any growth in the
first seven months of this year.
Digital sales in Argentina accounted for 8.2% of the trade value of recorded-music sales last year,
up from 4.9% in 2008. A problem for the Argentinean digital sector is the dominance of mobile, in
particularly real tones. According to CAPIF, the mobile platform accounted for two-thirds of the
digital market last year, with real tones taking a 44.2% share of the trade value of mobile sales (see
fig. 4). Music & Copyright has calculated that the trade value of real tones stood at US$1.2 million
last year, down from US$1.7 million in 2008. A fall in this digital revenue source is not surprising
and echoes a trend in most developed music markets in Latin America and the rest of the world.
However, in contrast with other developed markets, no other digital source seems likely to take
the lead.
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Fig. 3: Argentina, physical recorded-music retail sales between January and July
2009
Units
2010
Value
Units
(ARS)
Singles (vinyl)
Singles (CD maxi)
Audiocassettes
CD albums
DVD (audio)
VHS
DVD (video)
Total
7,802
53,275
1,456
Value
Value
(ARS)
(US$)
Value change
(%)
10,105
2,614
-81.0
3,747
25,876
-
-
-
-
40,631
500,915
69,870
269,293
69,650
-46.2
7,981,873
169,546,086
5,750,788
130,598,041
33,777,877
-23.0
-5
-294
1,927
80,543
20,832
-
-82
1,166
2
61
16
-94.8
881,292
25,105,493
761,292
21,671,970
5,605,238
-13.7
8,915,258
195,230,185
6,585,335
152,630,013
39,476,226
-21.8
Note: Currency exchange is the average for the period
Source: CAPIF
Fig. 4: Argentina, digital-recorded-music trade revenues by format share, 2009 (%)
Single
track
12.14%
Online
Other
Album
audio
0.28%
0.21%
Mobile
Other
19.8%
Streams
87.37%
Real tones
44.2%
Ring-back
tones
3.9%
Single
track
12.0%
Albums
20.1%
Source: CAPIF
Full tracks and single downloads to mobile have not really taken off in any markets outside of
Asia, with the Internet the preferred download platform. According to CAPIF, single and album
downloads took a 12.4% share of online trade revenues last year. Internet revenues were
dominated by streaming, which had an 87.4% share, up from barely over 0% last year. Despite
being hailed by some as something of a savior for the music industry, streaming services
elsewhere in the world have been criticized by rights-holder groups for their low returns, even
though streaming levels have been high. But streaming services have also received some praise as
an alternative to online file sharing, a problem exacerbated in Argentina after the steady rise in
recent years of broadband Internet access.
Repertoire
Domestic artists continued to account for the largest share of music sales last year, taking 44.9%
of the total, a figure virtually unchanged from 2008 (see fig. 5). English/other-language music
sales experienced growth at the expense of Spanish-language sales, which fell to 13.3% of the
total.
Fig. 5: Argentina, recorded-music sales by repertoire source, 2008-2010 (% units)
www.informatm.com
2008
2009
Jan-Jul 10
Local
44.8
44.9
46.1
English/other
34.3
38.1
37.3
Spanish
16.3
13.3
12.6
Classical
4.1
3.3
3.6
Compilations
0.5
0.5
0.4
Source: CAPIF
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Classical-music sales also experienced a decrease in share. For the first seven months of this
year, domestic artists increased their share of unit sales to 46.1%, from 44.8% in the same period of
last year. English/other-language music’s share of sales was also up in the latest seven-month
period, from 34.8% to 37.3%. Spanish-language music was the biggest loser, with sales falling from
15.8% to 12.6%.
Recording companies
SME maintained its position as the largest of the four majors in 2009, with an increased market
share of 31.5% (see fig. 6). SME was dominant in terms of the 10 best-selling albums, with six
placings, including the year’s top seller – Cantora, un Viaje Intimo, from the late folk singer
Mercedes Sosa – according to figures published by CAPIF. The compilation album Number Ones by
Michael Jackson was No. 2 for SME, followed by Spanish singer/songwriter Joaquin Sabina’s
Vinagre y Rosas. SME continued to achieve success with the Teenangels series of albums, with
Teenangels 3 the fourth-best-seller for the company. The band is part of local telenovela Casi
Angeles, which has been screened in Argentina since 2006. This year, SME has seen strong sales of
the album and separate album/DVD package of Joan Manuel Serrat’s Hijo de la Luz y de la Sombra.
Fig. 6: Argentina, recorded-music market shares by label, 2007-2009 (%)
2007
2008
2009
EMI
16.5
14.7
13.5
SME
30.8
30.6
31.5
UMG
19.8
20.7
21.5
WMG
16.7
16.4
16.8
Other
16.2
17.6
16.7
Source: Music & Copyright
Second, with a 21.5% share in 2009, was UMG. International artists U2 and the Jonas Brothers
recorded the strongest sales for UMG in 2009. U2’s No Line on the Horizon sold about 75,000 units,
and the Jonas Brothers’ Lines, Vines and Trying Times sold 45,000 units. Domestic best-sellers
included Marco Antonio Solis’ albums No Molestar and La Historia Continua and Luis Fonsi’s
Palabras del Silencio. This year, Justin Bieber’s My Worlds has been the best-selling album for UMG,
with sales of about 34,000 units. Nick Jonas & the Administration’s Who I Am has also sold well.
Best-selling domestic-artist releases this year for the company include Diego Torres’ Distinto and
Sandro’s Secretamente Palabras de Amor (Para Escuchar en Penumbras).
WMG was the third-largest of the majors, with a slightly improved market share of 16.8%.
International artists proved most successful for the company last year, with Ricardo Arjona’s
album Quinto Piso WMG’s best seller and Argentina’s sixth-best-selling album. Alejandro Sanz’s
Paraiso Express also sold well in 2009, along with Madonna’s Celebration and Michael Buble’s Crazy
Love. The eponymously titled album by Consentidos was the leading domestic-album release,
followed by Cristian Soloa’s self-titled release. International artists have dominated album sales
this year for WMG, with Arjona’s Poquita Ropa the best-seller for the company, ahead of
Madonna’s Sticky & Sweet Tour and Andres Calamaro’s On the Rock.
EMI is the smallest of the four majors, with a slightly reduced market share of 13.5%. According to
CAPIF, EMI had the country’s second-best-selling album last year, with Las Cosas Son Como Son by
Ricardo Montaner. The only other EMI release among the 20 best-sellers last year was Nini’s
Arriba Las Ilusiones. This year EMI has achieved success with Spanish singer Enrique Bunbury’s Las
Consecuencias album, One Love by David Guetta and Coldplay’s Viva la Vida or Death All His Friends.
Sales of Coldplay’s 2008-released album have been boosted by the band’s tour of the region
earlier this year.
The collective share of independent music companies stood at 16.7% in 2009. Leading indies
include Distribuidora Belgrano Norte, Popart Discos, Leader Music and Music Brokers.
Music retail
The average retail price of a current CD album is ARS35-40, with catalog titles usually priced at
about ARS30, which includes a 21% sales tax. The leading music and home-entertainment chain,
Musimundo, claims a commanding market share of about 45% via its 55 stores nationwide.
Musimundo also sells concert tickets and home and business computers and runs movie-rental
service musimundovideoclub.com.
The country’s other leading music retailer, Ilhsa, doubles as Argentina’s largest bookstore chain,
operating 43 stores under the Yenny and El Alteria brands, mostly in the Buenos Aires area, as well
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as one location in Uruguay. Its online-sales channel, Tematika.com, claims to be the largest
Spanish-language bookstore in the world, serving more than 200,000 customers in 60 countries.
All told, the chain claims about 30% of the country’s music-retail market. A number of smaller
operations make up the remaining 25% of the market.
On the digital side, Grupo Clarin – the largest media corporation in the country – is, not
surprisingly, the leading producer of digital content. Besides publishing Latin America’s most
widely read newspaper, Clarin, and operating two of Argentina’s most popular radio stations
(Mitre, AM 790, and The 100, FM 99.9), it also manages a website, Ubbi, that specializes in song
and ring-tone downloads. Radio10’s www.10Musica.com offers music and video downloads and
streaming radio, while its Faro Latino recently launched a redesigned website. However, the
shifting political climate in Argentina might have negative ramifications for the company. The
country’s president, Cristina Fernandez, has repeatedly been in disagreement with the
conglomerate over a perceived bias against her and husband Nestor Kirchner’s governments;
Kirchner serves as secretary general of the Union of South American Nations (UNASUR).
In August the government revoked the operating license of Clarin’s Fibertel broadband Internet
provider, maintaining that it was providing a service illegally. It gave the company 90 days to
notify customers and allow them time to select another provider. That action followed the
National Communications Commission’s decision that Fibertel would not be allowed to take on
new customers. At issue are Fibertel’s original merger with Clarin’s pay TV unit, Cablevision, and
the sale of the resulting company’s service under the Fibertel name, moves the government
maintains were illegal.
The government has also sought to suspend a 2007 merger of Cablevision and Multicanal – the
nation’s two largest cable TV providers – maintaining that the companies failed to fulfill their
investment commitments. Cablevision has vowed to appeal that decision, while calling the
government’s actions “totalitarian.”
All of this activity comes under the Fernandez government’s claim that it is seeking to
democratize the nation’s communications landscape, including placing limits on ownership of
cable and broadcast operations in a single market. A bill passed last year could force Clarin to sell
many of those assets. The law is under judicial review; if approved, it will have a considerable
effect on both Clarin and Argentina’s media landscape.
In the meantime, Clarin appears to be feeling no ill effects from all the judicial jockeying. In
August it announced that net sales for 1H10 increased 9% year-on-year, to ARS3.5 billion, in large
part because of subscription growth in its cable-TV and Internet-access businesses. Net income
totaled ARS247.1 million, compared with the ARS90.9 million reported for 1H09.
Also affecting the digital landscape is the introduction of Apple’s iTunes store in late 2009.
Although market-share figures are not available, Apple says it considers its Argentinean business
to be robust. In addition to retailers such as Musimundo and Ilhsa, and Nokia Argentina, iTunes’
portable-music-space competitors include the nation’s three mobile phone service providers:
Claro, the largest mobile network in Latin America, which has exclusive rights to video content
from MTV and Disney; Movistar, operated by Spain-based Telefonica Moviles; and Buenos Airesbased Telecom Argentina. In addition, Argentine wireless operator Personal has begun offering an
unlimited one-year music plan on its Android-enabled Motorola Quench phones.
Subscription service Sonora, which launched in Brazil in 2006, ventured into Argentina in
October 2009, followed by the expansion of the service into Chile and Colombia; the company
expects to add several more Latin American countries by year-end. Sonora belongs to portal and
Internet-access provider Terra, which itself is owned by telecommunications concern Telefonica,
the largest of Argentina’s broadband providers (see fig. 7).
Sonora offers a variety of plans, from unlimited streaming to streaming with downloads, with
nearly 2 million tracks available to subscribers. In Argentina, consumers can opt for Sonora Free,
which allows up to 20 hours of free streaming each month, or pay a monthly fee of ARS5 for the
ad-free Sonora Plus plan, which allows unlimited streaming and up to 10 DRM-free downloads a
month. Sonora has 40,000 paid subscribers and 150,000 who use the free service.
Piracy and copyright protection
As is the case for much of Latin America, piracy remains a considerable problem in Argentina.
According to the International Intellectual Property Alliance (IIPA), physical piracy of music
product accounts for 60% of the music market, a figure that has remained relatively steady over
the past few years (see fig. 8). According to the latest IIPA estimates, about 20 million units of
pirate product are sold each year, causing an estimated US$63.4 million in losses for 2009. Digital
piracy, meanwhile, continues to explode, accounting for 99% of the nation’s digital-music market.
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The latest estimates are that more than 800 million tracks are downloaded illegally in Argentina
each year.
Fig. 7: Argentina, leading broadband and mobile operators, 2007-1Q10
2007
2008
2009
1Q10
Share of total (%)
Telefonica de Argentina
828,600
1,092,000
1,247,600
1,286,200
34.9
Telecom Argentina
783,000
1,042,000
1,223,000
1,241,000
33.7
CableVision
670,300
889,100
953,700
979,200
26.6
Broadband (households)
Other
283,100
242,500
175,300
175,760
4.8
Total
2,565,000
3,265,600
3,599,600
3,682,160
100.0
23.1
28.9
34.7
35.5
35.0
Household penetration (%)
Mobile (subscriptions)
AMX Argentina
13,639,870
15,397,280
16,946,710
17,317,000
Telefonica Moviles
13,427,700
14,829,610
15,931,900
16,182,000
32.7
Telecom Personal
10,881,000
12,564,000
14,513,000
14,948,000
30.2
Nextel Argentina
Total
812,500
957,000
1,030,100
1,054,000
2.1
38,761,070
43,747,890
48,421,710
49,501,000
100.0
97.5
109.0
119.4
Population penetration (%)
121.8
Source: Informa Telecoms & Media
Fig. 8: Argentina, physical music-piracy levels, 2004-2009
Loss
Level
100
80
60
60
40
40
Level (%)
Loss (US$ mil.)
80
20
20
0
0
2004
2005
2006
2007
2008
2009
Source: IIPA
Of particular concern are vendors selling pirated product at street fairs, such as the public
market La Salada in Buenos Aires. Various copyright organizations and law-enforcement officials
maintain that vendors at such fairs sell pirated and counterfeit merchandise to retailers and
resellers, both in Argentina and in neighboring nations. According to IIPA estimates, La Salada
covers about 2 million square feet and is visited by about 50,000 consumers daily; the cost of
purchasing a stand in the fair is reportedly about US$80,000. Similar fairs continue to crop up
around the country, often drawing organized groups that provide raw materials for piracy and the
recording, storing and distributing of pirated product.
Despite continued pronouncements by the Argentine government regarding tightening
copyright protection, and despite initiatives such as the Iber-American Culture Congress’
“Medellin Declaration,” wherein the culture ministers of Argentina, Colombia, Guatemala and
Costa Rica joined forces to step up efforts to promote local music in Latin America, the IIPA
recommended earlier this year that Argentina remain on the US Trade Representative’s Priority
Watch List. At the same time it called on the government to make antipiracy legislation and its
enforcement higher priorities.
The legality of search engines providing links to unauthorized music content received some
clarification last month. The National Chamber of Civil Appeals overturned an earlier court
decision that stated that search engines were liable for content presented by sites the search
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engine provided links to. The original ruling was made against Google’s and Yahoo’s Argentine
services and applied to the singer Virginia da Cunha, who had complained that the search engines
linked to content that damaged her “moral character.” The appeals court overturned the earlier
ruling and said that search engines could only be found liable if they did not remove links to
offending content when notified. Google described the decision as being a major advance for the
Internet industry and one that applied internationally accepted search-engine standards.
Royalty collections
Local authors’ society SADAIC has not yet published collection figures for its fiscal year, which
ended June 30. According to the IFPI, the amount in performance-rights collections paid to
recording companies last year increased to US$6.6 million, from US$5 million in 2008. Since 1990,
neighboring rights in Argentina have been collected by a joint venture comprising performing
artists’ association AADI and CAPIF. Collections are divided between producers (33%) and artists
(67%), figures more favorable to artists than the 50/50 split seen in most of the world. Based on
IFPI figures, Music & Copyright has calculated that total performance collections in 2009 stood at
about US$20 million.
At the end of last year Argentina extended the term of protection for sound recordings. The
amendment to Article 5 of the country’s Intellectual Property Act increased the term of
protection on sound recordings for performers and producers from 50 years to 70 years. Term
extension was supported by AADI and CAPIF, each of which said the new legislation would better
protect local performers and producers and bring the country closer in line with emerging
international trends in this area.
Broadcasting
The terrestrial TV sector consists of five free-to-air networks. Of these, only the governmentfunded TV Publica (Canal 7) airs 24 hours a day. Argentina follows a US-style network-and-affiliate
model. Only Television Federal (Telefe) owns and operates its stations. Telefonica-owned Telefe
(Canal 11) and Grupo Clarin-owned Artear (Canal 13) are the most popular networks and share
about 80% of broadcast revenues.
As part of a series of changes being made to the Media Law – which is currently suspended
pending various litigation – the government has introduced reforms designed to open up the
terrestrial sector. The Autoridad Federal de Servicios de Comunicacion (AFSC, formerly COMFER)
wants to ensure greater access to frequencies for smaller players and restrict the number of
licenses granted to dominant media companies. It wants a third of broadcasting spectrum to be
allocated to nongovernmental organizations and not-for-profit organizations, such as universities,
with the remaining two-thirds going to state-owned and private broadcasters.
Another part of the bill mandates that 60% of a network’s media content be produced
domestically, a move that is designed to create jobs in the sector. The AFSC is also moving to limit
connections between the terrestrial and pay TV sectors, by banning companies from owning TV
channels and cable operations in the same city. This regulation looks set to force those companies
to sell some of the conflicting assets within a year.
During the peso crisis, broadcasters significantly decreased spending on dollar-denominated
programming, resulting in a sharp reduction in the number of imports and a greater focus on
local, low-cost production. Local productions appeared cheap to outsiders, so Argentinean
revenues from program exports doubled.
About half of the 10.6 million TV households take a pay TV subscription, with cable accounting
for the vast majority. However, digital cable only began in earnest in 2007, with full conversion
expected to take a decade. Cable penetration is high for two main reasons. First, multichannel
ARPU is relatively low, at US$30 a month, compared with US$40+ in most advanced TV markets.
Second, cable infrastructure was rolled out as a cheap alternative to terrestrial TV in many areas,
so in those markets it is viewed as the “default” TV platform.
However, this “default” status is under threat from the new digital terrestrial TV (DTT) platform,
which began being rolled out in April 2010. Patchy analog terrestrial coverage means that about
30% of the population receives no more than two channels. With DTT making a full free-to-air
offering available nationwide for the first time, and delivering HD programming free, some
consumers will be inclined to abandon subscription-based TV.
DirecTV Latin America is the only satellite-TV provider, accounting for over half of the country’s
digital subscribers. Although satellite penetration is relatively low, the company’s performance
has improved in recent years: Its share of the pay TV market has grown to about 15%, compared
with just 5% in 2005.
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Live
Hit hard in 2009 by the A/H1N1 virus, the Argentinean concert industry has had to withstand
another unusual – though hardly as traumatic – challenge this year with the soccer World Cup. In
June, few major albums were released and only a handful of concerts by major acts took place,
because the soccer faithful preferred watching the matches to going out.
Nevertheless, most international tours typically play the country in the fall and winter months,
with such names as Green Day, the Jonas Brothers with Demi Lovato, Norah Jones, the Scorpions,
Yanni, Pixies, Incubus, Lamb of God and Canadian heavy-metal band the Agonist all scheduled to
appear by year-end. Moreover, U2 might add South American dates this year or next.
Buenos Aires is the country’s premier concert hot spot for international acts, with the Jonas
Brothers playing one date and AC/DC playing three dates at the 56,449-seat Estadio Monumental
Antonio Vespucio Liberti, or River Plate Stadium, earlier this year. The Quilmes Rock festival, held
from 2002 to 2004 and reactivated in 2007, was also staged at the stadium this year, headlined by
Guns N’ Roses.
Luna Park, an 8,000-seat arena in the city, has become a favorite concert site, hosting Incubus,
Norah Jones and Marco Antonio Solis, among others, this year. The venue also serves as one of
Argentina’s main boxing arenas. The 4,700-capacity Club Ciudad de Buenos Aires will again host
the annual Pepsi Music Festival in October. Featuring more than 100 bands over five days, the
festival’s lineup includes Faith No More, the Ting Tings, Maximo Park, Gogol Bordello, Living
Colour, Puerto Rican hip-hop/alternative-rock duo Calle 13, and Argentinean rockers Catupecu
Machu, Kapanga, Karamelo Santo, Los Autenticos Decadentes and Los Tipitos.
Another popular attraction, the Cosquin Rock Festival, held its tenth annual gathering in
February in Cosquin Cordoba. Headlined by Deep Purple in 2009, the hard-rock festival’s lineup
this year included Sepultura, Die Toten Hosen, Zoe, Nailgunner, Las Pelotas and Babasonicos.
Secondary concert stops can be found in Cordoba, Argentina’s second-largest city and home to
any number of clubs, catering to fans of reggaeton, electronic music and cuarteto, an upbeat style
reminiscent of meringue. The city’s 14,000-capacity Orfeo Superdomo, used primarily for
basketball, volleyball and tennis, hosted a Jan. 24 concert by Metallica that sold out within a few
hours of being announced; the band had played two shows at Estadio Monumental Antonio
Vespucio Liberti earlier that same week. Orfeo will also host dates by Argentine musician Andres
Calamaro, Marco Antonio Solis, Chayanne and a performance by the cast of teen soap opera Casi
Angeles (Almost Angels) later this year.
Other Argentinean cities with significant live-music venues include Mendoza and Rosario.
Throughout the country, tango clubs still proliferate, including Buenos Aires’ Cochabamba 444
and Mister Tango.
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News tracking •
Legal
Appeals court overturns UMG victory in royalties case
The US Court of Appeals in San Francisco has ruled that a decision made by a lower court last year
in a case brought by former producers of the rapper Eminem regarding royalty payments from the
downloading of sound recordings was incorrect. FBT Productions, which is credited with
discovering Eminem in 1995, filed the case against UMG in 2007, in which it claimed that master
recordings were “licensed” to UMG for the manufacturing and sale of recordings but not
provided as a master copy for the distribution of tracks to download retailers. Licensing the use of
recordings would have resulted in royalty payments of 50% of net receipts. However, distribution
to retailers incurs greater deductions. This is how UMG had interpreted the agreement with FBT,
and it had subsequently been making royalty payments of 12%. Although the jury in the original
case agreed that UMG’s interpretation of the agreement was correct and ruled against FBT, the
three-judge panel at the Appeals Court decided that the agreements made in 1998 between FBT
and UMG subsidiary Aftermath Records, which released Eminem’s breakthrough album, The Slim
Shady LP, “unambiguously provide that notwithstanding the records sold provision, Aftermath
owed FBT a 50% royalty under the masters licensed provision.” The judges also said that “because
the agreements were unambiguous and were not reasonably susceptible to Aftermath’s
interpretation, the district court erred in denying FBT summary judgment.” UMG has said that it
will make a request for a rehearing. Although the ruling has not established a legal precedent,
because it only concerns the details of the FBT/Aftermath agreement, depending on the result of
any rehearing, it is still likely to influence other cases questioning similar contract definitions.
Trouble for YouTube in Germany
A German court has thrown the legality of user-generated-content (UGC) video-streaming services
in the country into question. Last week a Hamburg state court ruled that Google-owned YouTube
must pay compensation to the copyright holder of several Sarah Brightman performances, which
were uploaded to YouTube without permission. Although the plaintiff was not named during the
trial, he was later identified in a Google statement as German composer and producer Frank
Peterson. The court said that the standard question asked to users of the service of whether they
hold the rights to the content being uploaded did not relieve YouTube of its legal responsibility
for the content contained. Google is widely reported to be preparing an appeal based on the fact
that it considers the ruling to be contrary to the European Union’s current e-commerce directive.
Google has, however, received some good news regarding its German service. A Hamburg court
refused to issue local authors’ society GEMA with an interim injunction concerning its legal
challenge regarding 75 compositions available on YouTube. But the judge in the case, Heiner
Steeneck, said that all is not lost for GEMA and that YouTube had “some duty to take care of
detecting illegal uploads.” Judge Steeneck also said GEMA might be successful should it request
such a ruling in regular proceedings.
Appeals judge overturns VPL tribunal ruling
Video Performance (VPL), which collects royalties for the public performance of music videos in
the UK, has successfully appealed a ruling by the UK’s Copyright Tribunal regarding the royalty
rate payable for the public performance of music videos in the UK. In September 2009, the
Copyright Board implemented a rate of 12.5% of gross revenues for broadcasters for use of music
videos. The decision was made in a case involving CSC Media Group, which is responsible for the
operation of several broadcast-TV channels, including Chart Show TV, The Vault and NME TV. VPL
had proposed a rate of 20%, while CSC had requested a rate of 8%. The High Court appeal ruling
means a new Copyright Tribunal will address the rate issue. VPL distributes revenues only to
record companies, because under UK law, performers have no performance rights in audiovisual
works.
SABC accused of nonpayment of royalties
South African public broadcaster SABC has been accused of withholding royalties payable to a
number of Recording Industry of South Africa (RISA) members. According to South African
newspaper The Times, RISA has filed a court action against the SABC claiming that its members
are owed up to ZAR28 million (US$3.9 million). In a letter addressed to RISA members from its
operations director, David du Plessis, and seen by The Times, RISA has not only lodged a claim for
compensation but has requested that SABC stop broadcasting its members’ music videos. The
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letter claims that SABC has not paid royalties since 2005. SABC is reported by The Times to have
justified the nonpayment on the basis that RISA members are not “the legal owner of the rights
to videos; that it [SABC] was not party to agreements with Risa; and that its chief financial officer
and director of content enterprises had not had the necessary authority to enter into any form of
extension agreement with RISA.”
BMI appeals DMX-rate court ruling
US authors’ society BMI has filed an appeal of the DMX decision, which was issued last month by
Judge Louis Stanton. Because DMX licenses music directly from individual music authors or their
publishers (see M&C 418/5), last month the rate court ruled that BMI must issue commercialmusic-service provider DMX with an adjustable-fee blanket license at a lower rate than BMI’s
traditional blanket license. “Our writers and publishers should not be expected to lose more than
half of their income from DMX based on the court’s erroneous holdings, which substantially
reduce the value of their creative efforts,” Del Bryant, BMI’s president and CEO, said in a
statement. The BMI statement also said that the appeal was expected to be taken up by the court
before the end of this year.
SABAM case against Netlog referred to the European Court of Justice
A Belgian court has referred a case brought by Belgian authors’ society SABAM against local
social-networking site Netlog to the European Court of Justice (ECJ). The move echoes an earlier
ECJ referral by a Belgian court in a case brought by SABAM against ISP Tiscali (see M&C 406/35).
The latest case centers on SABAM’s request for Netlog to implement filtering technology to
reduce unauthorized use of music by the site.
Copyright and licensing
Brazilian election candidate to stop using Michael Jackson track in campaign
Lindolfo Pires, a state legislative candidate in northeastern Brazil, has been denied the use of the
Michael Jackson track Beat It in a jingle promoting his election campaign on his website. SME,
whose publishing division, Sony/ATV, owns the rights to the track, obtained a court order
preventing Pires from using the track.
Indian performance royalty rate revised
The Indian Copyright Board, which is part of the government’s Ministry of Human Resources
Development, has issued a directive changing the structure of performance-rights payments for
FM-radio broadcasters. Effective immediately, FM-radio broadcasters will now pay 2% of their net
revenues. Previously, performance rights were paid on an hourly rate, with some local estimates
putting the rate at INR1,200-1,600 (US$26.60-35.50). The broadcasters welcomed the shift to a
revenue-sharing model, but the local music companies are considering a legal challenge.
According to the IFPI, performance-rights payments to music companies totaled US$24.6 million
in 2009. Local reports suggest that this was equal to about 18% of radio broadcasters’ net
advertising revenues last year. Based on a rate of 2%, last year’s payments would have been
substantially reduced, to about US$2.7 million.
Piracy
African rights-holder-copyright-protection body to launch next year
With piracy of media content rife in much of Africa, an initiative is being launched next year to
promote the respect of copyright and to provide measures to enforce copyright laws. Africa
Media Rights Watch is set to be officially launched in February and will involve a number of
broadcasters and content suppliers that are active in sub-Saharan Africa. According to local
reports, the initiative is supported by local and international broadcasters, including Canal+
Overseas and M-Net.
HADOPI in public-information drive
HADOPI, which is in charge of administering the three-strikes antipiracy measures contained
within France’s Creation and Internet law, has begun a public-awareness campaign to explain how
the process will work. In the last two weekends in August, several hundred thousand leaflets
www.informatm.com
30
September 08, 2010
Music & Copyright
Issue 419
were distributed to motorists detailing the system of warnings, level of fines and possible
disconnection of Internet access for users found to be repeatedly downloading illegal content.
Copyright Board of Kenya to roll out antipiracy system
In an effort to cut the level of audiovisual piracy, the Copyright Board of Kenya is set to begin
rolling out a new authentication system for the sale of audiovisual content in the country. At an
estimated cost of about KES12 million (US$141,180), the system will force retailers to only sell
videos that contain an official three-dimensional holographic symbol. The Copyright Board is
supplying the symbols for KES10 each. About 90% of all videos sold in Kenya are thought to be
pirate copies. According to local reports, the rollout has begun in markets in Kericho and
Mombasa but will be extended nationally in the coming months.
Digital and technology
Landscape Channel relaunches in the UK
The Landscape Channel has relaunched on UK pay TV platform BSkyB after a five-year hiatus. The
music channel, which originally launched in 1989, was forced to close in 2003 after it ran out of
money. However, the channel, which has relaunched as part of Sky’s Information package, has
reappeared with a raft of high-definition instrumental and classical-music series.
Longer song samples lead to more music buying
New research has found that access to longer track samples increases the likelihood that a
listener will purchase the track. Currently, the standard sample length offered by digital-music
retailers is 30 seconds. However, according to a study conducted by professor Min Lu and
assistant professor Yanbin Tu of Robert Morris University in Pennsylvania, longer digital-music
samples with a higher quality were found to increase the sampler’s “music evaluation” and make
the evaluation process more useful. The study found that samplers’ music evaluation significantly
determined the willingness to buy. This suggests that providing longer track samples would result
in increased purchases and not, as some in the music industry suggest, increase the probability
that the sampler will take the music sample as a substitute for the original music track.
Mobile
ASCAP launches app for iPhone, iPad and iPod Touch
US authors’ society ASCAP has launched ASCAP Mobile, an application for the iPhone, iPad and
iPod Touch. The app provides ASCAP’s songwriter, composer and publisher members with access
to their membership, catalog, performance and royalty information via ASCAP’s secure Member
Access online portal. The app also enables users to search ASCAP’s entire repertory of
copyrighted musical works and browse news about ASCAP and the wider music industry. The app
is free and can be downloaded from the App Store.
Company news
BMG Rights Management to make more acquisitions
The joint owners of BMG Rights Management (BMGRM), Bertelsmann and asset-management
company Kohlberg Kravis Roberts, plan to each invest €200 million (US$257.8 million) in the music
publisher over the next three years. Confirmation of the new funding was made at a recent
Bertelsmann press conference. The company also confirmed that more acquisitions will be made
before the end of this year. Late last month, BMGRM announced a publishing deal with hip-hop
label Selfmade Records to develop new talent.
www.informatm.com
31
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Kevin Zimmerman
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