Money Matters in the Music Business - PART 2

Performing Rights are the New Future of Record and Music Revenue
Contribution by Jonathan G Shaw
Now, speaking of things that have changed, you may have got your record on radio but this no longer means generating a significant amount of sales. In fact, this was foreseen the big record companies in South Africa around 14 years ago. Year on year since 2008 the South African recorded music sector has seen a steep drop in the amount of records song. Digital sales revenue has only recently started picking up, but is still far from replacing lost profits. In 2002, lobbying on the part of record companies by the Recording Industry of South Africa (RISA) led to the introduction of performing rights for the recording of the music.

Songwriters and music publishers, who work with the music only and are often own as a division of a major entertainment company, never had any part in the recording pmicrophonerocess. For historical reasons, music publishers totally missed the ball on recording technology, and by today’s standards it almost seems antiquated not to also record one’s music. But music publishers have forged their own space in the music business landscape, being the custodians of music rights. Since the late 1800s, music has enjoyed the right of public performance and the royalties which accrue to them from music’s use in broadcasting and on stage. Songwriting has also evolved from crafting major orchestral pieces (by and large left to the realm of motion picture production) to jotting down some words which kinda rhyme. Now, I don’t know about what you have heard, but many aspiring rappers don’t separate the act of writing lyrics and their performance. How can a songwriter write lyrics and a rapper then rap them? This practice is almost unheard of, but this is essentially the different between the music publishing business, the performance or live music sector and the recorded music sector.

Typically, the music publishing sector has always been the smallest revenue area in the music business, but also the most consistent. If you had written just one hit, it was likely to earn you a lot of money in the long run even after the recording of it was dead and gone (or out of copyright). For the better part of 50 years the recorded music sector was the largest second but slipped to second place over the last 5 years. As record sales tumbled, recorded music executives scrambled to replace lost revenue and as mentioned above reintroducing performing rights in recorded music was in line with this agenda, along with taking more from the overall income of an artist they signed. If you imagine with me, think about how the way we listen to music is changing, and you can quite well imagine that given how technology is shaping our work we may never need to actually store a large amount of data like we needed to in the past. Gosh, even thinking about buying a little piece of plastic from a store and having to put it into a machine which would then interpret and play the data from that disc back is rather old by now. No. You need to adjust yourself to the fact that music – and any type of digital information – will eventually simply be called from internet and played back in pristine quality. For the last decade this has already happened in first world countries: major music streaming services are now recognised as the de facto music listening standard among youth and cited as the major revenue replacement of recorded music revenue. Many artist however have complained bitterly that while streaming is massive, it only makes them a few thousand in revenue, especially after the label has taken their cut. Even traditional radio, on average, may make a songwriter around R3000 in a year and an artist around the same amount. So If you are on Apple Music, Simfy or Spotify and have your music on radio you could well be looking at only R6050 in a whole year from performance royalties – and that’s only if you just happen to find your song doing about 50 plays on radio per week. If it was a hit, the royalties would be at least five figure amounts. Still, this is only one revenue stream in a long list, so pay attention.

Read Part 1 of this article HERE.



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