The performance rights market is worth over US$1 billion a year.

Performance Rights

The performance rights sector illustrates how music plays a vital part in driving a much broader range of economic activity. IFPI works with music licensing companies across the world to help ensure that those who produce and perform music used for public performance and broadcast are fairly rewarded for their work.

Broadcasters around the world use recorded music in radio and television programmes. Radio advertising, worth US$33 billion globally, is underpinned by recorded music, for example.

In most countries, broadcasters are required to pay a royalty to the artists, producers and songwriters that created the music they play.

Recorded music is also used by a wide range of businesses — from bars to retailers, gyms to nightclubs — to attract customers, drive spending and motivate employees. These businesses are also required in most countries to pay a royalty fee for the music they use.

Music licensing companies, licensed by record labels, collect revenue from these companies and distribute it to the relevant artists and producers.

Revenue from the use of sound recordings in broadcast and public performance increased by 8.3 per cent in 2014 to US$948 million, to represent 6 per cent of all global recorded music revenues.

Potential for growth

Despite strong growth in recent years, there is still plenty of untapped potential in the performance rights market. The three largest economies in the world — the US, China and Japan — still lack a public performance right. Rates paid by third-party businesses are still too low in many countries, not compensating artists and producers fairly for their music.

IFPI works with its national groups and music licensing companies to campaign for the introduction of rights where they are absent and to improve royalty rates where they are below international standards. For example, PPCA, the Australian music licensing company, has in recent years successfully campaigned to secure increased payments from nightclubs, fitness centres, restaurants and free-to-air telecasters.

Artist Lindy Morrison, formerly of the Go-Betweens, says:

“Performance rights income is increasingly important to recording artists and those that invest in their recorded performances. When we create music that is then used by businesses to draw in customers and increase their revenues, it is only fair we are paid a reasonable amount for the benefits we have delivered.”

Research commissioned by MusicWorks, a joint initiative by UK music licensing companies PPL and PRS for Music, who represent artists, record producers and songwriters, and undertaken by Entertainment Media Research found:

• A third of customers are willing to pay 5 per cent more in businesses that play music
• 74 per cent of employees enjoy going to work more when music is being played, and a third are less likely to take time off sick
• More than half of customers spend more time in a shop that plays music
• 91 per cent of those surveyed prefer a bar that plays background music — two-thirds said they would not return to their favourite bar if the music was turned off
• 81 per cent prefer hair salons that play music
• 82 per cent of gym users like to hear music as they work out
• Playing music in waiting rooms makes over three-quarters of people more relaxed