Merlin Doubles Earnings, Digital Accounts for Half of Members’ Revenue

In News by Merlin Team

By Ed Christman, New York | June 19, 2014 5:05 PM EDT

Merlin, the global rights agency for the independent music sector, says it collected $89 million from digital music services for its members in the year ended April 30, 2014. The figure is double the amount that it had collected in the prior year and, moreover, Merlin projects that the current year’s revenue will nearly double again, to exceed $160 million.

Merlin’s revenue comes from licensing contracts it negotiates on behalf of its members. Currently, Merlin is involved in negotiations on behalf of its members with YouTube about its proposed premium service. While Merlin will not comment on that situation, other indie groups, including A2IM, WIN and Impala have — or are about to — reach out to regulatory bodies to investigate Youtube’s business negotiations on the service.

Merlin’s membership totals over 20,000 independent record labels and distributors, and the industry group conducted a survey of its members and shared its findings today at the A2IM convention in New York.
“The Merlin member survey provides a unique and illuminating snapshot of how independent labels are leading the way in the transformation of the global music market,” Merlin CEO Charles Caldas said in a statement.

Through data collected from its member companies, Merlin says that its members’ music on streaming services outperforms the wider digital market. In another observation, Merlin notes that its members’ share of pro-rata plays on premium (paid) streaming services are 30% higher than on free-to- the-consumer services.

“It is now abundantly clear that the new dynamics offered by streaming platforms are well-suited to the independent sector,” Caldas added. “Independent labels have long enjoyed an increased market share for sales of digital albums, but we are seeing usage of indie repertoire on streaming services is even more pronounced, and particularly so on paid-for, premium tiers that attract the most committed and discerning fans. The most successful services are those that have understood these dynamics and treat our sector with parity and respect.”

In other news, Merlin reports that almost half of its survey respondents reported digital income representing more than 50% of their overall business. A quarter of member respondents reported that digital is 75% of their total business. Within the digital business, one in five of its members reported that streaming revenue accounts for more than 50% of their digital income.

While the overall market is reporting drops in digital download sales, nowadays more than half the Merlin respondents (54%) reported an increase in a-la-carte downloads between 2012 -2013, though that was down from 65% in the 2011-2012 period.

“This transition is not without its challenges,” Caldas conceded. “For many labels, managing the transition from unit sales to access will be a strenuous process, and there are significant concerns about consolidation and predatory behaviour in the wider music and technology sectors. However, we are confident that despite the challenges to the value of their music, independents will continue to thrive in the digital space.”

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