Music is the ultimate good news-bad news business. Streaming is the future but it earns much less money than CDs, and although the live-music economy is booming, part of the reason for that is because artists have to tour — they can’t make money from selling their music.
Like the rest of the industry, synch licensing has good and bad news. The good news is there’s money out there — for artists, songwriters, labels, publishers. The bad news is that the current mindset of many labels and artist-management companies leaves money on the table — they pass on small opportunities because they only want big opportunities; or they don’t set up the infrastructure — in-house or through a third party — to capitalize on the smaller, quick-turn license market.
To recap quickly, over the past 20-odd years synch licensing has become one of the biggest sources of revenue in the music industry. Every time music is used in a commercial, television show, video game, motion picture or its trailer, the creator must negotiate separate licenses with the owners of both the sound recording (usually a label) and the underlying composition (usually a music publisher). Take Marvel Studios’ use of The Sweet’s 1975 hit “Fox on the Run” in the motion picture “Guardians of the Galaxy” and its trailer. Copyright law requires the studio to obtain separate licenses from RCA Records and TRO Essex Music publishing. The cost of the licenses depends on several factors, such as the types of use (theater, DVD, streaming, TV, etc.) and geography (United States, ex-United States, global, and so on).
The Recording Industry Association of America’s report for 2016 (covering just recorded music, not publishing) showed synch revenues were flat in 2016, with just a 0.7 percent revenue increase — basically the same zero-growth we’ve seen for the last handful of years. It’s completely counterintuitive: People stream 6 billion hours of video on YouTube alone each month. More and more familiar songs are heard in TV commercials every year. Synch revenue should be going through the roof, right? Not according to this report.