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The Story of Royalties
Erica Smith Chief Executive Of?cer Copyright Society of Composers Authors and Publisher Inc. Barbados The global music industry has experienced signi?cant changes in the forms of commercialization of creative assets, with a shift to digital platforms due to advances in technology. As a result of these changes, which promote digital distribution, there has been an explosion of content and in the variety of forms of the exploitation of music. According to the International Federation of the Phonograghic Industry (IFPI) digital sales now account for 32% of the revenue of record companies globally and over 50% in the USA. These new forms of exploitation are heavily reliant on the licensing of rights as it is no longer necessary for the individual listener and commercial entities which use music (in applications such as ?lm, television, advertising and games), to own the music but simply to have access to it. The movement from sales to licensing means that royalty earnings, which have always been an important source of revenue is quickly becoming the main source. In keeping with this shift of emphasis, the role of the Collective Management Organisation (CMO) as a distributor of revenue is becoming ever more important. In terms of collections, music copyright societies reported earnings of over 6 billion Euros in 2009 while related rights societies reported just over US$1 billion. In fact, worldwide there is a growth in the number of CMOs and as there are multiple rights and rights-owners which exist in music, it is possible to have multiple CMOs representing these various interests. For example, a song might have multiple writers, composers and publishers, who in turn have CMOs representing their rights (copyright). Additionally, the performers and producers who own rights in the recordings of songs (related rights) are represented, usually, by separate CMOs. So, how is all of this relevant to the Caribbean? As with the rest of the world, physical sales in Barbados have plummeted to the extent that distribution points for legitimate product are very few. Given that we have good telecommunications technology and high Internet use, we can assume that there has been a shift in distribution to digital platforms. Similarly, in most Caribbean islands, there is now at least one CMO, and in the majority of cases, these organisations have been around for at least 10 years and represent a sizable portion of local rights-owners. A second assumption would be that, the regional CMOs represent an important source of revenue for rights-owners, as is the case with other CMOs. In addition to the above, Caribbean Governments have identi?ed the creative sector as a priority area with a focus on speci?c subsectors including music. As a result, a number of initiatives have been implemented including the development of various strategies, the completion of numerous studies and through the offering of programmes by a number of support institutions. There are also multiple fonts of international development funding programmes, which focus on the creative sector. Based on the foregoing it can be reasonably argued that there is now more support than ever for the regional music industry. A third assumption therefore, is that the regional music industry is thriving. None of the above assumptions hold true, however, if we use the collection of royalties as a measure of success. In the ?rst instance, the royalties collected for digital exploitation for most regional rights-owners is negligible, as Caribbean music has failed to make any signi?cant impact in the global digital economy. This is also true for royalties generated locally and imported. This situation can largely be explained by the fact that regional attempts to develop digital platforms have not been very successful. The fundamental challenge lies in the characteristics of the industry in the Caribbean – it is very fragmented and informal which makes the clearance of rights very dif?cult