Most of the recent attention on the music industry has focused on the tension between falling CD sales and the rise of digital music: Will the latter compensate for the former?
Yet it is not recordings that will drive net growth for the industry. Instead, live music and music publishing will grow along with the digital sector to offset CD sales losses.
Changes in music publishing and licensing will also create attractive opportunities for marketers who want to tap into the power of music to captivate audiences, particularly the highly sought-after teen and young-adult demographics.
eMarketer projects that performance royalties paid to composers and publishers will reach $1.98 billion in the US by 2011, up from the 2006 total of $1.64 billion.
This growth will follow a period in which the two leading US performance rights societies, which account for a combined 95% of US performance income, increased their revenues.
Bill Velez, former president of live recording performance rights group SESAC, said, "Unless there's a total catastrophe in terms of a recession, and radio stations and TV stations go out of business in leaps and bounds and can't pay their license fees, [the performing rights industry is] going to have a good year every year."
Similarly, the licensing of music for commercials, television shows, films and videogames — known as synchronization licensing — is on the rise. eMarketer projects this segment will increase in the next five years, reaching $2.5 billion in 2011, up from $2.1 billion in 2006.
As Warner Music Group's 2006 annual report stated, "Synchronization revenues have experienced strong growth in recent years and will continue to do so, benefiting from the proliferation of media channels, a recovery in advertising, robust videogames sales and growing DVD film sales/rentals."