On June 11th, 2014 the annual NMPA meeting was held in New York City. This meeting was coupled with a full breakdown and analysis of music publishing revenue generated in 2013 by NMPA President David Israelite. With their new modernization program, for the first time since the organizations inception, the NMPA has required publisher members to provide revenue data for the fiscal year 2013. This allowed for the organization to calculate exactly how much revenue was being generated within the industry ($2.2 Billion) and how much revenue was being lost due to government regulations ($2.3 Billion). Joining this night was Congressman Doug Collins, who spoke about the importance of his bill, The Songwriter Equity Act.
In 2013 $1.09 Billion, over half of all publishing income (52%) came from Performance Royalties. This is a major pool for most songwriters and highly regulated due to Section 114(i) of the Copyright Act that prevents the federal rate courts from considering sound recording royalty rates when determining performance royalty rates. This has become an increasingly important issue as new digital and streaming services enter the market place and the royatly paid for the composition is much less than the royalty paid for the recording. The Songwriter Equity Act will help establish free market value to performance rights by allowing a rate court to factor in current recording rates when determining the compensation for the composition.
The 23% of the pie comes from Mechanical Royalties. This side of the business is also highly regulated by the government because of the Compulsory Mechanical License. This was introduced in 1909 through Section 115 of the Copyright Act. Under this law, the amount owed to a songwriter in the US for any manufacture of a song is 9.1 cents. This rate has only increased by 7.1 cents since being introduced in 1909. The Songwriter Equity Act imposes a “fair rate standard for reproduction” meaning mechanical royalty rates would be adjusted to reflect the free market value of the compositions.
20% of the music publishing pie is generated by Synchronization Licenses. This is the only section of the business that is open to free market negotiation and not regulated by outdated laws or consent decrees. The synch fee is negotiated for music being used in films, commercials, T.V. Shows and more.
The remaining 5% comes from a variety of small pools including sheet music, lyric websites, ringtones and smartphone apps.