IFPI response to the Berklee College report
The recent Rethink Music report contains useful information on the complex economics of the modern music business. The report highlights many principles around securing a fair value for music that are important and which IFPI and its member companies would agree with. Unfortunately, the report also contains too much inaccurate information, unsubstantiated assertions, and consequently unfair criticisms of record companies.
In particular, the report omits certain key points which means that it gives an incomplete picture of what is happening in the industry. According to IFPI's independently verified data in a strong sample of 18 markets, artists' revenues have declined less than industry revenues overall. Artist payments fell by 6 per cent over the last five years to 2014, considerably less than the 17 per cent decline in industry revenues. This means that payments to artists by record companies as a share of revenues have increased by 13 per cent over the same period.
At the same time, upfront record company investment in A&R and marketing has not significantly diminished (see IFPI’s Investing in Music report). According to IFPI data, the proportion of record companies' income invested in A&R and marketing slipped marginally from 28 to 27 per cent between 2008 and 2013.
The real problem for artists and record companies is that some of the largest digital services in the world claim to be exempted from copyright and do not pay a fair market value for music to artists and labels. That is where the real problem lies and which policymakers need to address.
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