Technique 3 minutes, 17 second read Richard Cottrell, CEO, Melos Publishing
Earlier this year there was some much-needed optimism for the music industry, as figures from the record labels’ association the BPI showed that streaming of music increased by more than 20 per cent in last year’s lockdown.
According to the BPI data, streaming accounted for more than 80 per cent of overall music consumption last year in the UK, with people listening to 139bn audio streams, an increase from 114bn in 2019. BPI chief executive, Geoff Taylor commented that record labels were investing heavily in new artists to help secure the future of British music.
At a time when two thirds of musicians are reportedly considering quitting the industry as the live sector has been all but wiped out by lockdown rules, this is undoubtedly positive news for the music sector. But it also has wider implications for the world of advertising which relies heavily on the talent and skill of musicians and composers for their creative campaigns.
Despite the BPI figures, the state of the music industry is still in dire straits, with the UK once again under its third national lockdown. At the same time, marketing budgets remain stagnant as brands navigate the turbulent waters of Britain’s economy.
So how can brands – and musicians – recoup cash as fast as possible in these challenging times?
The economic opportunity of music royalties
Consider the enormous untapped resource of music royalties used within advertising campaigns. Our analysis of the industry suggests there are hundreds of millions of dollars of performance royalties available every year for music that is used within advertising, and yet staggeringly, only about 20 per cent is accurately reported and paid out to the rights owners. The result is over half a billion dollars unclaimed every year, with brands, creative agencies and musicians all being left considerably out of pocket.
Not only is this an incredibly valuable opportunity for brands to recoup significant amounts of money from existing media spend, at a time when marketing budgets are nothing but cautious, but it's also an opportunity to ensure that the musicians they work with are being paid fairly for the music they have created. Never has it been more crucial to ensure the correct payment for their contributions.
The answer lies with technology
On the surface, the recouping of music ad royalties is a complex process, with the current system failing to meet the brands’ needs, while being ill-suited to different global markets in which brands and advertisers operate. What’s more, the numerous stakeholders involved – from composers and musicians to brands, agencies and media platforms – only add to the intricacies surrounding the process.
One thing however is clear – the advancement of technology and the availability of multiple data sources has meant the process of music tracking can be greatly simplified.
Big Data enables us to help brands automatically monitor not only where but how often their advertisements are being played. And as a result, Collection Societies can accurately distribute music royalties to brands, their creative agencies and the musicians they work with. This can vastly increase annual royalties from commercials to brands and composers, while also resulting in payments from multiple international markets.
To illustrate the impact this can have, we worked with an international travel brand and their composer who had been receiving £25,000 every year in performance royalties in the UK. Even though their commercials were broadcast in over 30 countries, they had not received any international payments. Yet through the application of data-driven technology, their royalties increased to over 20x per year, including payments from more than 25 different territories. This technology also enables brands to recoup back-dated royalties, meaning a significant catch-up payment for the brand and also the musicians they work with.
Put simply, data-led technology can deliver unparalleled results for brands, ensuring the music used in adverts is accurately reported across the world, not only benefiting the brands themselves but the musicians in their supply chain. As we enter new lockdown restrictions, never has this been more welcome.