Music Royalties 101

Summary

This presentation offers an in-depth look at music royalties, explaining the concept, types, and how they generate income. It distinguishes between royalties and copyrights, highlighting the different revenue streams such as synchronization, mechanical, and performance royalties. The script delves into the distribution process, the role of publishers and labels, and the historical context of royalty earnings, providing insights into the music industry's financial landscape.

Takeaways

• 🎵 A royalty is a payment made to the owner of an asset, like a song, for the right to use that asset in the music business.
• 📝 In music, there are two types of copyrights for each song: one for the composition (written song) and one for the sound recording (recorded version).
• 👥 Multiple contributors to a song can have a royalty interest and collect royalties as compensation for their efforts.
• 💰 Royalties are paid out at set intervals and are based on the use of the music, not company performance, and are earned before stockholders' dividends.
• 🔄 There are different types of music royalties, including synchronization, mechanical, and performance royalties, each dependent on the use of the song or recording.
• 🏦 Royalties are collected and distributed by various entities, such as publishers for songwriters and labels or distribution services for artists.
• 📈 Copyright terms for music determine the length of time royalties are paid, with the current U.S. term being the lifetime of the last surviving author plus 70 years.
• 📊 Public performance royalties are common and are collected by performing rights organizations (PROs) like ASCAP or BMI for songwriters and publishers.
• 💿 Mechanical royalties are paid to songwriters when their music is reproduced and sold, with rates set by the Copyright Royalty Board.
• 🎬 Sync royalties are paid for the use of music in visual media like TV shows and commercials, with rates negotiable based on various factors.
• 📊 The global recorded music market has seen growth, with streaming revenues accounting for more than half of the total, and physical sales declining.

Q & A

What is the main difference between a royalty and other types of investments?

A royalty is a payment made to the owner of an asset for the right to use that asset, and it is paid out at set intervals based on use, not company performance, whereas other investments like stocks may pay dividends based on the company's performance or profits.

How many types of copyrights does a song have?

A song has two types of copyrights: one for the musical composition (as it is written) and one for the sound recording (as it is recorded).

What are the different types of music royalties?

The different types of music royalties include synchronization royalties, mechanical royalties, and performance royalties, each based on how the songs and recordings are used.

Who typically collects and distributes the royalties for sound recording copyrights?

Sound recording royalties are typically collected and distributed by record labels or distribution services, which then pay the artists according to their contracts.

How does the public performance royalty work for the composition copyright?

Public performance royalties for the composition copyright are collected by performing rights organizations (PROs) like ASCAP or BMI, which monitor and collect royalties from various sources and then distribute them to publishers and songwriters.

What is the role of a music publisher in the royalty collection process?

A music publisher signs a publishing deal with a songwriter, owns the copyright, and is responsible for exploiting the copyright to generate royalties through sync, mechanical, and performance rights.

How are mechanical royalties calculated for streaming services?

The mechanical royalty rate for streaming services is much lower than for physical sales, calculated at approximately 0.0006 cents per song, with rates set by the Copyright Royalty Board.

What is the significance of sync royalties in the music industry?

Sync royalties are payments made for the rights to use music in TV shows, commercials, movies, or online videos, and they are fully negotiable with custom rates for each use, contributing to a significant part of the music industry revenues.

How has the music industry revenue changed over the years according to the IFPI report?

According to the IFPI report, the global recorded music market has seen growth, with streaming revenues accounting for more than half of the global recorded music revenue, while physical sales and digital downloads are falling.

What are the main sources of public performance royalties as reported by BMI?

The main sources of public performance royalties reported by BMI include cable and satellite (30%), digital sources like streaming (28%), TV and radio broadcast (24%), and venues, live events, bars, and restaurants (18%).

How can an investor learn more about music royalties and the royalty exchange marketplace?

Investors can download the ultimate guide to buying music royalties from the website, register for office hours Q&A sessions, explore the investor resources section of the blog, or subscribe to the marketplace update newsletter.

Outlines

00:00

🎵 Introduction to Music Royalties and Copyrights

Welcome to Music Royalties 101. This presentation covers what royalties and copyrights are, their differences, types of music royalties, income generation, money flow in the music industry, and a brief history of royalty earnings. A royalty is a payment made to the owner of an asset for the right to use it. In music, royalties are generated through licensing songs, and various contributors to a song's creation have royalty interests. Royalties are paid based on song usage, not company performance, providing revenue before stockholders receive dividends. Music royalties are categorized based on copyrights: composition and sound recording copyrights.

05:01

📝 Types of Copyrights and Royalties

Every song has two copyrights: one for the written song (composition) and one for the recorded song (sound recording). The composition copyright is owned by the songwriter, while the sound recording copyright is owned by the performer or recording artist. For example, Bob Dylan's 'Knockin' on Heaven's Door' has composition royalties for Dylan and sound recording royalties for his record label. Different types of royalties include synchronization, mechanical, and performance royalties, each generating income for both copyright holders. Publishers and record labels handle royalty collection and distribution for songwriters and artists, respectively.

10:02

🎤 Composition and Sound Recording Royalties

Composition and sound recording copyrights generate royalties through sync rights, mechanical rights, and performance rights. Songwriters often sign with publishers who exploit copyrights to generate royalties. These royalties are split between the publisher and songwriter. The sound recording copyright is typically owned by the record label, which provides artists with recording infrastructure in exchange for ownership and a share of royalties. Independent artists may use digital distribution services to manage their music and royalties. Copyright terms determine how long royalties are paid, with music created after 1977 having a copyright duration of the author's lifetime plus 70 years.

15:03

📻 Public Performance Royalties

Public performance royalties are paid when a song is played publicly outside of private settings. These royalties are collected from radio stations, TV networks, bars, clubs, restaurants, and streaming sites. Performing rights organizations (PROs) like ASCAP and BMI handle the licensing and collection for songwriters and publishers. In the US, sound recording copyright holders only collect performance royalties for digital and satellite radio through SoundExchange. Terrestrial radio royalties are unique to the composition copyright holders. Royalties and payments are negotiated and determined by PROs.

💿 Mechanical Royalties Explained

Mechanical royalties compensate songwriters when their music is reproduced and sold, including physical albums, digital downloads, and streams. The term 'mechanical' originates from the early days of player pianos. Today, mechanical royalties apply to various formats, with rates set by the Copyright Royalty Board. For example, the statutory rate for physical albums and digital downloads is 9.1 cents per song. Streaming royalties are significantly lower, with ongoing negotiations to increase rates. Artists covering songs must pay mechanical royalties to the original songwriters and publishers.

🎬 Synchronization Royalties and Licensing

Synchronization (sync) royalties are paid for the right to use music in TV shows, commercials, movies, and online videos. Sync licenses are negotiated based on the song's popularity, production budget, and usage context. Producers pay a sync fee for the composition and a master use license for the sound recording. Sync placements also generate performance royalties when the production is broadcast. These royalties provide an additional revenue stream beyond the initial sync fee, enhancing the overall earnings for songwriters and artists.

💰 Money Flow in Music Royalties

The flow of money for music royalties varies by type. Public performance royalties for compositions are collected by PROs and distributed to publishers and songwriters. Sound recording performance royalties are collected by SoundExchange and distributed to artists, labels, and a fund for session musicians. Mechanical royalties are paid by streaming services or retailers to publishers, who then pay songwriters. Sync licenses are paid directly to music publishers and record labels, who distribute the earnings to songwriters and artists. Each type of royalty has a unique flow, ensuring fair compensation for contributors.

📊 Music Industry Revenue Trends

The IFPI reports on global recorded music revenues, highlighting growth trends. In 2019, global recorded music revenues grew by 8.2% to $20.2 billion, with streaming accounting for over half of the revenue. Physical sales and digital downloads declined, while public performance and sync revenues remained stable. The NMPA reported US music publishing revenues at $3.72 billion in 2019, with performance royalties contributing the most. PROs like ASCAP and BMI have seen public performance royalties surpass $1 billion annually, with cable/satellite and digital sources being significant revenue contributors.

🔍 Additional Resources for Music Royalties

For further information on music royalties, resources include the 'Ultimate Guide to Buying Music Royalties' on the Royalty Exchange website, monthly Q&A sessions, a comprehensive investor resources library, and a weekly marketplace update newsletter. These resources provide insights into royalty types, industry changes, and investment opportunities, helping investors navigate the complexities of music royalty investments.

Keywords

💡Royalty

A royalty is a payment made to the owner of an asset for the right to use that asset. In the context of the music industry, royalties are earned every time a song is used commercially, such as being played on the radio or streamed online. The script explains that royalties are a form of compensation for creators and rights holders, and they are a central theme of the video, illustrating how they generate income from music usage.

💡Copyright

Copyright is a legal right that grants the creator of an original work exclusive rights to its use and distribution. The video script distinguishes between two types of copyrights for a song: the composition copyright, which covers the song as written, and the sound recording copyright, which covers the recorded version of the song. Copyrights are essential for understanding the basis on which royalties are earned and protected.

💡Musical Composition Copyright

This term refers to the legal protection and rights granted to the original form of a song, including the melody and lyrics. The script uses the example of Bob Dylan's 'Knocking on Heaven's Door' to illustrate how the composition copyright applies to the song as it is written, with royalties being collected by the songwriter or their publisher.

💡Sound Recording Copyright

This type of copyright pertains to the specific recording of a song, protecting the unique performance and production elements. The script explains that the sound recording copyright is owned by the artist or band who recorded the song, and they collect royalties for uses of their specific recording, separate from the composition royalties.

💡Sync Royalties

Sync royalties are payments made for the synchronization of music with visual media, such as in films, commercials, or TV shows. The script mentions that sync royalties are an important income stream for songwriters and publishers, who license the use of their compositions in these visual works and receive compensation for it.

💡Mechanical Royalties

Mechanical royalties are earned when a song is reproduced and sold in a physical or digital format. The script explains that these royalties are paid to the owner of the composition copyright, such as when a song is sold as a CD, downloaded digitally, or streamed on platforms like Spotify or Apple Music.

💡Performance Royalties

Performance royalties are generated when a song is played or performed publicly. The script details how these royalties are collected by performing rights organizations (PROs) like ASCAP or BMI for the songwriters and publishers, and by SoundExchange for the sound recording copyright holders, whenever their music is played on the radio, in public venues, or streamed online.

💡Publisher

In the music industry, a publisher is an individual or company that helps to manage, exploit, and protect the copyrights of musical compositions. The script describes how publishers work with songwriters, often owning the copyright and being responsible for generating royalties through various means, including sync, mechanical, and performance rights.

💡Record Label

A record label is a company that is involved in the production, marketing, and distribution of music recordings. The script explains the role of record labels in managing the sound recording copyrights, collecting royalties for their artists, and sometimes paying out a percentage of those royalties to the artists based on their contracts.

💡Public Domain

The public domain refers to creative works that are not protected by copyright and are therefore free to be used by anyone. The script touches on the importance of copyright terms, noting that once a copyright expires, the work enters the public domain, and no further royalties are paid for its use.

💡Investment Perspective

The script discusses royalties from an investment standpoint, comparing them to other types of investments like stocks. It explains that royalties provide a revenue stream that is paid out before company profits (like dividends) and are based on the use of the music rather than the performance of a company's stock.

Highlights

Royalties are payments made to the owner of an asset for the right to use that asset in the music business.

Multiple contributors to a song have a royalty interest and collect royalties as compensation for their efforts.

Royalties are paid out at set intervals based on use, not company performance, unlike dividends.

A song has two copyrights: one for the musical composition and one for the sound recording.

Different entities collect and distribute royalties for sound recording and composition copyrights.

Composition and sound recording copyrights generate royalties based on synchronization, reproduction, and performance uses.

Public performance royalties are collected by performing rights organizations like ASCAP or BMI for songwriters and publishers.

Sound recording royalties for public performance are collected by SoundExchange, primarily for internet and satellite radio.

Mechanical royalties compensate songwriters for the reproduction and sale of their music.

Sync royalties are paid for the use of music in visual media, such as TV shows and commercials.

Copyright terms determine how long royalties are paid, with music created after 1977 having a lifetime plus 70 years of protection.

The global recorded music market saw growth, with streaming revenues accounting for over half of the total revenue.

Physical sales and digital downloads are declining, while streaming continues to grow as the primary source of music consumption.

Performance royalties are a significant contributor to publishing revenues, alongside mechanical and synchronization royalties.

Digital sources are becoming increasingly important for public performance royalties, especially for older music.

Investors can access resources and guides to better understand music royalty investments and the market.

Transcripts

hello and welcome to music royalties 101

in this presentation we'll explain what

royalties and copyrights are and how

they work the different types of music

royalties and how they generate income

how money flows through the music

industry and a bit about the history of

royalty earnings over time so let's get

started

so first what is a royalty and how a

royalty is different than other types of

investments a royalty is a payment made

to the owner of an asset for the right

to use that asset in the music business

songs are licensed for various types of

views and those uses generate royalties

a royalty interest is the right to

collect on a stream of royalty payments

in the music business multiple people

who contribute to the creation of a song

have a royalty interest in that song and

collect those royalties as compensation

for their efforts

any time that song is used those who own

royalties attached to it will collect

royalty payments depending on their

contribution to the song and how it's

used from an investment perspective

royalties are cut off the top of the

revenues generated by music they are

paid out at set specified intervals

payment is based on use not company

performance and all this means that the

royalty holder earns revenue before

stockholders in a company royalties are

not awarded based on the woman of a

corporate board like a dividend for

instance so think of a royalty like

earning a penny for every iPhone sold

versus a share of Apple stock the music

business generates multiple types of

royalties and each royalty stream is

dependent on the kind of copyright they

are associated with every song has two

copyrights one for the song as is

written and one for the song as it is

recorded take for instance the song

knocking on heaven's door written and

performed by Bob Dylan the musical

composition copyright covers a song as

it is written by the songwriter this is

the person who wrote the melody notes

lyrics etc once that song is recorded

another copyright is generated called

the sound recording copyright the person

or the band who recorded the song owns

the recording copyright in some cases

the songwriter and the performer are the

same person such as in this case but

often multiple songwriters may assist in

writing the songs and all will have a

royalty interest on the use of the

composition copyright also as in this

case other artists may record the song

and they will own and collect royalties

on the sound recording copyright for the

version they record but only the

songwriter in this case Bob Dylan will

collect the composition

royalties for those versions other than

his own we'll get into more of that in a

minute but first let's talk about what

types of royalties pay to these two

copyrights both the sound recording and

the composition copyrights generate

royalties based on how the songs and

recordings are used these include

synchronization royalties reproduction

or mechanical royalties and performance

royalties we're gonna get into what each

of these are in a moment but for now you

can see that both the sound recording

and the composition copyright holder

earns royalties for these uses finally

there are different entities that

collect and distribute the royalties

generated by each copyright songwriters

sign with publishers or use publishing

administration services for their

royalties an artist sign with labels or

use distribution services for theirs as

you can see here Bob Dylan's record

label Columbia Records collects the

royalties for the sound recording

copyright of the song and pays Dylan

according to his contract with the label

in this example we're focusing on the

original studio recording now if there

was a live recording by Bob Dylan on the

same song that would create yet another

master or sound recording copyright and

that live version would collect

royalties in the same way as the studio

version but only for uses of the live

version versus the studio version now

for the composition Dylan's publishers

Sony ATV and ram's horn music hold the

composition copyright for the song and

they paid Dylan his share of royalties

based on his publishing agreement with

them now there can only be one

composition copyright for a song but one

song could have multiple master

recordings so let's look at the Guns

N'Roses version of the same song knockin

on heaven's door at the left you'll see

that we changed the version of the

recorded song from Bob Dylan to Guns &

Roses and as you can see here Guns

N'Roses and their label Geffen Records

collect the sound recording royalties

for the version of the song that they

recorded Bob Dylan and his publisher

meanwhile collect the composition

royalties because Guns and Roses used

his original composition for their

recording Bob Dylan does not collect

royalties for the Guns N'Roses sound

recording only Guns and Roses collects

that but Bob Dylan does collect on the

composition so let's talk about how

these are grimas and writes work here's

an overview of the composition copyright

again the composition copyright collects

royalties for sync rights mechanical

rights and performance rights these

royalties are split between the

publisher share and the writers share

typically a songwriter will sign with a

publisher and what's called a publishing

deal in these deals

the publisher winds up owning the

copyright and in return has the task of

exploiting the copyright to generate

royalties through sync mechanical and

performance rights that means they'll

work to license the music to generate

sync income and ensure that anyone

selling or streaming the music has

permission to do so all realities

generated from the composition copyright

are split between the publisher and the

songwriter typically it's 50/50 for

performance royalties but mechanical and

sync splits can vary by the label deal

or by the publisher deal rather

sometimes multiple songwriters work with

the same publisher in which case the

publisher will keep half over the

royalties and the songwriters will split

the other half between themselves based

on internal split agreements and in

still other cases a songwriter might be

self-published and in which case they'll

collect all the royalties now the sound

recording copyright works a little bit

differently typically artists sign a

contract with the record label the label

preside provides in advance and the

recording infrastructure for artists to

record their album in return the label

will own the sound recording copyright

any royalties the sound recording

copyright earns is collected by the

label and then label pays the artists

percentage of the royalties based on

their contractual agreement this can be

like 15% to the artist or it could be

far more the range varies widely some

artists don't work with the record label

taking what's called the DIY route or

indie route these artists use digital

distribution services to get their music

on various digital services and then

either conduct their own marketing and

promotion or hire services or

consultants to do it for them either way

they collect all of the royalties the

sound recording royalties that they

generate finally recording artists will

also hire other musicians and producers

that are not formally part of the band

to contribute to the recording these

musicians and producers may also be

awarded a portion of the royalties as

compensation for their contribution to

the recording now a quick note about

copyright terms and by terms we mean the

length of time that the copyright is

valid royalties are only paid for as

long as the copyright is enforced

once the copyright expires the asset

enters the public domain and no

royalties are paid for them but one of

the greatest advantages to owning a

music royalty attached to a copyright is

the length of time the copyright remains

in force from music created after 1977

the duration of copyright in the u.s. is

a lifetime of the last Romanian author

Plus 70 years music before then is

governed by different rules to

and on when the music was created but

the maximum copyright length under the

old rules was 95 years after creation

now let's break down in greater detail

each of the different types of royalties

we've outlined first we'll dig in the

public performance royalties due to the

songwriter as this is the most common

royalty stream we make available to

investors in the royalty exchange

marketplace a public performance license

and royalty payment is necessary

whenever a song is played or performed

publicly outside of a private circle of

family or friends that means if you're

having a barbeque and you play music

through your backyard speakers you don't

know a music royalty for a public

performance but if you're at a barbecue

restaurant that is streaming music into

the dining area that restaurant owner

does public performance royalties

collect from multiple sources these

includes radio stations TV networks bars

and clubs restaurants music venues and

streaming sites like Pandora or Spotify

all of these pay public performance

royalties as a regular cost of doing

business if the business in any way

shape or form plays music as a way to

enhance their business to the public

they are required by law to obtain a

public performance license from the

copyright holder however there are

differences with the composition rights

holder and the sound recording rights

holder in terms of how they collect

public performance royalties for the

musical composition publishers and

songwriters outsource the licensing and

collection of public performance

royalties to collection organizations

such as ASCAP or BMI these companies are

known as performing rights organizations

otherwise known as PR o--'s their

activity covers all sources of public

performance royalties that I mentioned

but only for songwriters and publishers

on the composition side in the US the

sound recording copyright only collects

public performance royalties for radio

streaming via satellite and the internet

record companies and performing artists

typically outsource the licensing and

collection of these public performance

royalties to an organization called

sound exchange although some have struck

direct deals with the services as well

it's worth noting that in the US the

sound recording copyright holder does

not collect royalties for music played

over terrestrial radio only the

composition rights hold it receives that

public performance royalty this is

unique to the US and a handful of other

countries like Iran and North Korea this

means that for songs recorded in the

radio airplay in other countries also

will likely not result in royalties for

the sound recording copyright since

there's no reciprocal agreement with

those countries now there is no finite

royalty rate or mathematical formula

available to the public to calculate

exactly what each performance of a song

earns the royalties and payments are

negotiated and determined by the

performing rights organizations again

ASCAP and BMI so now let's talk about

mechanical royalties these are how

songwriters are compensated when the

music they write is in any way

reproduced and sold this includes the

saleable final record a CD digital

download and even streams on Spotify and

Apple music the term mechanical harkens

back to the day when the main way to

listen to music was through player

pianos rolls of perforated paper were

created that once inserted into the

piano told it which notes to play this

required machines to mechanically press

the piano rolls in order to produce a

song and to multiple copies of sound

recordings to sell to the public in

other words the composition was

mechanically reproduced that term stuck

and overtime and is applied to vinyl

records and then cassette tapes CDs

digital downloads and now even streaming

so whenever an artist or a record

company wants to reproduce a song

through a sound recording they have to

pay a mechanical royalty to the owner of

the composition copyright for instance

earlier we explained how Guns'n'Roses

recorded Bob Dylan's knockin on heaven's

door whenever that song is sold or

streamed GNR Guns'n'Roses

must pay a mechanical royalty to Bob

Dylan and his music publisher so

essentially when an artist covers

someone else's song and releases it on

their album or when an artist writes

their own song the record company owes

the artist of mechanical royalty the

amount of that payment depends on the

format the statutory rate for the

mechanical royalty today is at 9.1 cents

per song per album copy for all physical

albums and digital downloads financially

this means that for every million albums

or songs sold the mechanical role T

generates around 91 thousand dollars in

earnings for the songwriter publisher

now the mechanical royalty rate for a

streaming song is much lower it's

calculated about point zero zero zero

six cents per song now mechanical

royalty rates are set every so often by

a group of

judges called the copyright royalty

board every few years they take input

from both the services and the artists

and determine a new rate schedule for

the years ahead

there are different hearings for each

type of format that pay mechanical

royalties streaming sales and so on

the most recent hearing for streaming

mechanical royalties was in 2018 and the

CRB ruled that streaming services would

have to increase the rate that it pays

songwriters and publishers for both

mechanical and publishing royalties from

10.5% of their annual revenues to 15.1%

at a rate that increases one percent a

year from 2019 through 2022 overall

that's a 44 percent increase over those

four years however some of the streaming

services like Spotify and Amazon in

particular are appealing that ruling now

let's talk about sync royalties if

you've ever watched a TV show or

commercial or seen a movie or streamed a

video online you've probably noticed the

amount of music that's used well the use

of this music has a cost and the

payments made for the rights to use

music in this way is called the sync

royalty the term sync is used because

the producers have to pay a licensing

fee to synchronize the songs or the

music to their video this means at any

time there's a marriage of music

individual images a sync license is

necessary the sync rate is licensed from

the music publisher for the musical

composition if the recording is also

used then a master use license is

required from the record company for the

actual sound recording it's an important

distinction because in some cases only

the composition is used like when a

character is sing in a song versus the

actual recording that the artist made

now there are no set rates for sync

licenses they are fully negotiable with

custom rates for each abuse factors can

include the popularity the song the

budget of the TV film production the

stature of the artist as well as other

factors like the timing and prominence

of the song and a particular scene now

it's also worth noting that sync

licenses also lead to a second income

stream which we already discussed

performance royalties each time a song

is used in a TV or film production the

initial sync fee is paid upfront it's a

one-time fee which is just for the

rights to place the song in the

production but then whenever the

production is broadcast on TV or film or

whatever then it generates a public

performance royalties so with a really

great sync placement of song you get

bonus money on top of the initial fee

so those are the main types of royalties

now we're gonna look at how the money

actually flows in each case for public

performance royalties do on the

composition copyright which you'll

remember is paid to the publisher and

songwriter the entity performing the

music publicly like the radio station

the TV venue or the service pays a

public performance royalty to an

organization called the PR ro which we

discussed earlier these companies do all

the work of monitoring and collecting

public performance royalties and then

pay their members both published ins as

publishers and songwriters directly for

a public performance royalties doing the

sound recording the different

organization called sound exchange does

the collecting satellite radio webcaster

internet radio stations pay the

performance world the two sound exchange

and sound exchange plays the artists 50%

the label 45% and then will pay 5% to a

fund set up through sag-aftra

to pay background musicians and session

musicians and things like that now on

the reproduction side the mechanical

royalty do the song writer and publisher

is paid differently depending on the

format for on-demand streaming services

the service will pay the publisher

directly and the publisher will pay the

songwriter their cut based on their

agreement for more retail sales like

digital or physical sales generally the

retailer pays the label and the label

then passes on the royalty to the

publisher who then pays the songwriter

now for the sound recording the

reproduction royalty is a little bit

more straightforward both the on-demand

streaming services and the retailers

will pay the label and the label pays

the band or the artist and supporting

artist per their contract the artist

cuts can vary widely from anywhere from

12% of income in royalties to even 50%

or more and it depends on the deal in

the stature of the artist now sync

licenses are also pretty simple the

producer of the ad or the TV show or

whoever simply pays the sync license to

the music publisher who then pays a

songwriter and if they're using a master

recording the same people will pay the

master use license to the record label

who then pays the artist finally let's

take a quick look at how the different

types of royalties contribute to overall

music industry revenues and how each has

grown over the years the IFPI is the

global trade organization for record

labels and produces an annual report on

the state of the industry with tracks a

lot of this here you'll see the most

recent chart tracking sound recording

revenues which includes all of 2019 data

a great chart because it shows not only

the total world the earnings but also

the source of royalties and both the

growth rates and contribution levels

they provide over a year over a year as

you can see some record and royalties

have rebounded from their low of 2014 to

increase annually every year since for

2019 total revenues for the global

recorded music market grew by 8.2

percent to 20 point two billion

streaming revenues as indicated by the

dark blue bars grew by twenty two point

nine percent to eleven point four

billion and that's notable because for

the first time streaming has accounted

for more than half of global recorded

music revenue at fifty six point one

percent now physical sales have fallen

by five point three percent as indicated

by the red bars and download sales

digital downloads as indicated by the

lighter blue bar are both also falling

and public performance in sync as

represented by the yellow and orange

bars respectively they're largely flat

or even year-over-year but if you look

at it historically usually they're

higher than their historic levels now

there's less data available globally for

publishing the national music publishers

Association reports on us publishing

figures which is what we'll show here

and it's thanks to a compilation of data

provided by the trade news organization

music business worldwide according to

the n MPA music publishers in the u.s.

generated three point seven two billion

in revenues in 2019 which is up eleven

point six percent year-on-year looking

at what contributes to that fifty two

point three percent of that figure came

from performance royalties eighteen

point five percent about 497 million

came from mechanical royalties and

twenty two point seven came from

synchronization royalties now let's look

at public performance royalties

specifically if you remember we said

that public performance royalties are

collected and distributed by

organizations called PR o--'s this chart

here shows what the two largest us PR

roles reported over the years ASCAP and

BMI now these two organizations report

on different fiscal year time frames so

they don't exactly match up timewise but

generally you can see that both have

surpassed 1 billion in public

performance royalty distributions for

the past three years and each year in

that time I said an all-time high

now it's also worth noting that public

performance royalties are generated from

multiple sources this chart shows how

the public performance earnings as

reported by BMI breaks down

in terms of source might be a little

hard to read so you'll see here that

cable and satellite represent the

biggest bucket at 30% while digital

sources like streaming for instance come

in very close second at 28% TV and radio

broadcast is at 24% and you know venues

live events bars restaurants and cetera

come in 18% now that's on royalties that

BMI collects which is includes a lot of

newer music the kind of music that we

don't necessarily make available on

royalty exchange we did our own analysis

and found that basically digital was by

far for the royalties acquired on

royalty exchange digital was by far the

leading source of earnings for public

performance royalties

whereas venues and TV and satellite and

things like that were actually closer to

1% largely because the music acquired on

royalty exchange is older the bands are

less likely to be taurine although many

still are and just generally it's this

the kind of royalties that you're

looking at in royalty exchange are

driving most of the revenue from

streaming so that's the overview and

some context and the music royalties we

hope this helps you understand the

activity behind your music royalty

investments a little better if you'd

like to dig in further we do have a few

resources for you one easy you can

download the ultimate guide to buying

music royalties which is available on

our website

you could always register from one of

our office hours Q&A sessions which we

hold monthly and you can ask any

question you like either in advance or

live during the call we do have a rather

broad investor resources library on our

website from our blog just go to blog

and look for the investor resources

section you'll see a number of articles

that'll be very helpful for you and you

could always of course subscribe to our

marketplace update newsletter which we

send once a week that includes

all the different types of royalties

that are currently available on the site

the activity on the site and also links

to some news articles that might help

you keep track of the you know weekly

changes and what's happening in the

music business so with that thank you

for watching we look forward to seeing

you on the royalty exchange marketplace