IFPI CEO defends labels with new research data

New research carried out by IFPI (International Federation of the Phonographic Industry)has found that contrary to reports surrounding streaming services, record labels aren’t to blame for low streaming royalty rates.

The data, independently verified by accountancy network BDO LLP, reports that while the global music market has experienced a decline in revenue, the proportion of labels’ revenues paid to local artists has increased by 13% over five years.

IFPI CEO Frances Moore (pictured) wrote in a blog posttitled Artists and Record Companies Need A Fair Digital Marketplaceovernight: “The issue is not that artists are getting lower royalty payments from digital services – they are not – but that the overall recorded music market has shrunk, which means smaller revenues for all involved.”

IFPI, the global industry representative, researched streaming payments to locally signed artists by labels in 18 markets worldwide, including Australia.It found that industry revenues in those markets were down 17% from 2009 to 2014, yet royalty payments to artists declined by only 6%.

Labels are still heavily invested in A&R and marketing.According to IFPI’s data, labels’ investment in the company sector dropped a meager 1% between 2008 and 2013, from 28% to 27%.

Record producers have taken marked financial risks as the music market shrinks;figures from French recording industry body SNEP show producers ultimately take home less revenue than the artists, after the costs that producersshare are deducted.

“[IFPI’s data] found that record producers have actually safeguarded artists’ incomes as best they can as they have rebuilt their businesses for the digital age,” Moore wrote in the post.

Moore also made mention of the ‘value gap’ affecting the music market. In April this year when the IFPI released its annualDigital Music Report, Moore revealed her plans to investigate copyright legislation because intermediary platforms like YouTube and Dailymotion were abusing safe harbour rules to host content without being subject to copyright liability.

Now, in last night’s blog post, Moore said that aside from music piracy, the ‘value gap’ was the “biggest single issue affecting artists’ and producers’ income today.”

“[…] artists and record producers are not being paid fairly for the use of their music. This is because user upload platforms, such as SoundCloud and YouTube, are taking advantage of exemptions from copyright laws that simply should not apply to them.”

Despite this contribution to the market’s revenue plight, Moore said record companies have licensed more than 40 million tracks to over 450 digital music services worldwide.

“In a fiercely competitive market, where the majority of recordings do not prove to be commercially successful, their investment is essential to help performers cut through to a mass audience,” Moore said. “That is why most unsigned artists – 70 per cent in the latest survey we published – want a record deal.”

As previously reported by the IFPI, subscription services are the fastest growing sector of the digital business. In Sweden –the most developed market in terms of subscription tier adoption –royalties paid to local artists have increased by 111%, with record producers’ income up by 47%.

“The true value of the record company as the primary investor in artists remains too often forgotten,” Moore said. “Record companies have maintained their vital role of upfront investment in artists. And, contrary to what some suggest, these costs have not significantly diminished in the digital age.”