APRA’s Dean Ormston talks record year, ‘Netflix effect’ and international revenue

The numbers are in. And they’re up, right across the board.

APRA AMCOS today reports all-time high $471.8 million revenue for its 2018-19 financial year, up 12.3%, thanks in part to surging royalties generating by streaming platforms and concerts.

At the same time, the rights society posted net distributable revenue of $410.9 million – that is, the money that flows on to members and affiliated societies – blew up by 13.2% to $362.8 million, against 8.2% last time.

Digital is the hero once again. Revenue from digital products grew by more than 30% to $175.4 million, led by the audio streaming sector at $105 million, a rate of growth of 28.2%.

APRA AMCOS

Also during the reporting period, income from live shows moved past $30 million for the first time, up 19% year-on-year, as income from overseas grew to $45.8 million, up 4.8%.

The “Netflix effect” bears out on the subscription video-on-demand category (SVOD), which grew by almost 42% to $26.1 million.

“Australian and New Zealand composers, songwriters and artists are pushing new boundaries and kicking goals in a globally competitive environment and at a time when there is more music content than ever before,” said APRA AMCOS CEO Dean Ormston in a statement revealing the annual results.

In the world of PROs, the search for efficiencies is never done. TIO caught up with Ormston for a deeper dive into the APRA AMCOS Year In Review, the effects of the OneMusic Australia launch on July 1, and other burning issues.

On overseas income

Foreign revenue is tricky. It’s not like being able to bank on organic growth that we might see in our general licensing area, or the growth that you see in streaming, because there is more of it being taken up.

Foreign is completely dependent on how successful Australian artists and songwriters are in the international market. You can very easily see a drop year-on-year in that space if there’s not a strong product in market, which is returned to us in royalties.

The good news is, it’s not only holding strong but it’s increasing. We do absolutely look at the investment in Sounds Australia over a 10-year period and the awareness of Australian artists in a very general sense at providing a really strong support for Australians exporting.

That has been part of the success. It’s a conversation we’re having with government, we are seeing a wave of success with Australian artists in traditional markets in North America and Europe but there’s also huge opportunity in South America.

Now is not the time to step back, now is the time to lean in and keep working on that space.

On digital and streaming

The growth year-on-year is a little down on the previous year and that’s not unexpected. That area, there was rapid and enormous take up and growth. We’re seeing audio streaming still growing incredibly strongly, but the superstar child over the last 12 months has been video-on-demand.

No surprise there, with the takeup of Netflix. We’re seeing a 41.8% increase in that space, which is pretty dramatic.

We think we’ll see continued growth in that space for the next couple of years.

On costs

Overall , the consumption of music is up which is really good news for us. The other really strong thing we report here is that, the net distributable piece going out to members.

Whilst it’s important to grow revenue overall, it’s important to not be costing you increasing amounts of money to get that money out the door, and to be managing that.

We are spending a lot on tech at the moment. We are a data company and we’re investing heavily in being positioned as a global player in that space.

In the last couple of years we’ve moved away from self-reporting mechanisms and paper-based mechanisms to doing things online. That’s a big challenge for us.

OneMusic

It’ll be the 2020-21 financial year where the full impact of OneMusic will come home.  This financial year 2019-2020 period, as we relicense businesses, we don’t get to see all of that revenue recognised in this financial year.

The initial results from One Music are looking really strong, so we’re very pleased with where that’s heading.

On talks with ARIA and CRA on compliance to content quotas

The conversation with commercial radio has been positive. We’ve had regular meetings around how is station compliance going against the code. That’s definitely improved.

What we have see though is stations are able to re-categorise themselves as to how they describe themselves and what level of Australian content they need to comply with. We have some issues with that. We’ve said to commercial radio we think we need to review the categories because otherwise you end up undermining the intent of the code itself. We’re in the midst of that conversation now.

Part of the conversation, the whole conversation of compliance, good, we’re moving on there. But the categories themselves haven’t been reviewed for 20 years, so the language alone is completely outdated.

We’re saying to commercial radio, we need to have a look at the categories. This will rumble on for a little longer.

Read the APRA AMCOS Year In Review here.

This article originally appeared on The Industry Observer, which is now part of The Music Network.