What is in store for the music publishing industry in the years to come?
The music industry limped to the end of a truly bruising 2020, and now the music publishing industry finds itself at a crossroads. Here, Paul Sampson explores all the changes, challenges and challengers that will emerge in the coming months and years.
The need to adapt to the realities of streaming as the default way that people listen to music has been an ongoing process for years, but the temporary destruction of the live music space has made it very clear just how much and how quickly publishers need to adapt to the challenges presented by more agile upstart competitors.
For those who have been in the industry for a while, there are a lot of parallels with the end of the 2000s and early 2010s, when streaming was growing fast, but not quite fast enough to cover the decline in physical media and traditional downloads.
There is also the reduction in performance revenue normally collected from bars, restaurants and retailers whenever they play records within their premises and a reduction in the production slate of TV shows, movies and video games — from which the majors would typically hope to obtain a steady stream of sync licensing income. While these factors should only be a temporary problem, they have still galvanised publishers to seek out additional revenue streams and otherwise future-proof their positions.
To pick one stand-out example of innovation from major publishers across the board, we should take a look at how they have worked with labels, hand in hand, to deliver virtual concerts and musical experiences to fans through their partnerships with the likes of Roblox, Fortnite and Minecraft, to name but a few.
Video games are the most profitable media that there is currently, dwarfing music and film individually, so greater integration between the music industry and video game developers is a natural evolution, even while individual copyright strikes make game streaming a legal minefield of takedown notices and recriminations that needs solving.
These virtual concerts are part of a much broader initiative of ‘Monetising Fandom’. In order to really maximise that opportunity, publishers are making efforts to expand the breadth of that fandom through non-traditional media.
The skyrocketing popularity of the Fleetwood Mac catalogue amongst Gen Z and Millennials was spurred on by a recent trend on TikTok, for example. As a consequence of this, UMPG will be looking to find ways to bring a new, younger fan base to what is arguably a diamond of a catalogue.
Over the next few years, there will be more and more opportunities for rights holders to monetise fandom with new revenue models maximising the UGC opportunity for them. In that same vein, we’re likely to see existing streaming platforms in the West try to mirror the success of their contemporaries in the East, by optimising merchandise sales, patronage and other proactive revenue and engagement – beyond the passive ‘listen only’ experience they provide today.
To that end, there has been an increased focus on obtaining rights to entire catalogues. The Taylor Swift and Scooter Braun melee may have been the most enduring of these stories this year, but the news that Bob Dylan’s publishing catalogue was being acquired by UMG was far more indicative of the way the industry is evolving. This isn’t a new trend (more than US$4 billion was spent on buying artists’ catalogues in 2019, according to MIDiA Research), but the eye-watering US$300 million price tag underlines just how valuable these kinds of deals have become.
We’ve already begun to see a shift to this sort of activity as game-changers like Hipgnosis and Tailwind have acquired high-performing catalogues at pace, with one eye on the stock market rather than on just short to mid-term incremental revenue.
By highlighting the under-valuation of copyright by the music industry itself Hipgnosis has neatly convinced Wall Street to bet on them, and left the music publishing behemoths racing to catch up. In fact UMPG’s purchase of Bob Dylan’s catalogue may be the first signs of them following a similar path, if the rumours of an IPO in 2022 are to be believed.
2020 will always be a black year on the music industry’s financial record, but looking back it will likely be seen as an inflection point – where young challenger brands came into their own by exploring new revenue opportunities, planning for the long term and reaffirming the value of legacy catalogues, with the major players rushing to follow suit. Like other sectors badly affected by the pandemic, companies that are likely to claw back their lost income in 2021 and beyond are the ones most embracing digital transformation and the value of better connecting with their customers.
Paul Sampson is the CEO at Lickd