details on changes in the music publishing business

Key points about the state of the music publishing business, gleaned from an excellent blog entry by Eric Beall:

Mechanical royalties take 2-4 years to get paid, so the apparent health of the business is deceptive in that it doesn’t yet reflect reductions in CD sales over the past few years. Mechanical losses *are* kicking in, though: The mechanical income that a publisher earned in 2007 was largely based on CDs sold in 2004 or 2005. Because of this, the publishing industry will always have a delayed reaction. If a bomb drops on record company profits this year, the explosion will be heard in the publishing business two to three years later. It appears that this year, there is the rumble of something about to go boom.

What about areas of growth? The other streams of income that keep publishers and songwriters afloat are actually rising, in many cases, enough to keep the overall budget numbers looking pretty placid. Sure, Warner Chappell’s mechanical income dropped. But the same report shows that their performance revenue jumped 7.9 percent, synchronization revenues climbed 6.3% and digital revenues also gained. That same week, BMI announced that they collected a record –breaking payout of $786 million this year, an eight percent jump over the previous year.

The new revenue streams emphasize hits more than ever: “hit” songs matter more today than ever before. Popular singles are the songs that will get played on the radio, on television, and in restaurants, bars and wedding halls. Consequently, the bulk of the money paid out by BMI and ASCAP goes to chart-topping “hit” songs. Very quickly, the whole industry is beginning to reflect the country music market, in which having a radio hit is all-important when it comes to earning significant income.

Except with revenue streams for soundtrack-style uses: “sync”- ability is the other key to cashing in. Songs that will work for advertising, television, movies or video games are far more valuable than generic album cuts on pop records. This gives a high value to certain styles, like electronica or alternative rock, which might not correspond with the level of CD sales in that particular genre.