Introducing the Societies
The three societies that serve creative musical activities are best described in their own words (italics added, and two under joint day-to-day management described under one heading):
“APRA|AMCOS work to ensure that composers, songwriters and publishers are rewarded whenever, and wherever, their musical works are played, performed or reproduced and we help Australian & New Zealand music consumers get access to the world’s musical repertoire.
“Australasian Performing Right Association Limited (APRA) was established in 1926 and now administers the performing and communication rights of 73,000+ composer, songwriter and music publisher members in Australia and New Zealand. Public performances of music include music used in pubs, clubs, fitness centres, shops, cinemas, festivals, whether performed live, on CDs or played on the radio or television. Communication of music covers music used for music on hold, music accessed over the internet or used by television or radio broadcasters.
“Australasian Mechanical Copyright Owners Society Limited (AMCOS) collects and distributes mechanical royalties for the reproduction of its 10,900+ members’ musical works for many different purposes. These include the manufacture of CDs, music videos and DVDs, digital downloads and the sale of mobile phone ringtones, the use of production music and the making of radio and television programmes. Since 1997, APRA has managed the day-to-day operations of the AMCOS business.”
Statements by the Phonographic Performance Company of Australia Limited:
“Our goal is to contribute to the growth of the Australian music community by promoting to business the value of using recorded music.” …
“We grant licences for the broadcast, communication or public playing of recorded music (e.g., CDs, records and digital downloads) or music videos. We then distribute the licence fees we collect to the record labels and Australian recording artists registered with us, under our Distribution Policy.
“There are at least two copyrights in most recordings and music videos:
- the copyright in the song (lyrics, composition etc.) — licences available from APRA;
- the copyright in the recording and/or music video of the song (a particular recorded performance) — ‘blanket’ licences available from us, or individual licences available from the copyright holders — licences available from PPCA.”
Wider Role of Societies
Through their individual charters, the three societies serve to protect the intellectual property interests of Australian creators of musical works: live and mediated public performance (APRA), the reproduction of musical works (AMCOS), and the interests of recording artists and record labels (PPCA).
The international mobility of all musical activities means that close international cooperation is called for. APRA and AMCOS are members of the International Confederation of Authors and Composers Societies (known by the French acronym CISAC), which at the time of writing has 232 member societies from 121 different countries. Those societies represent around 3 million individual creators from all the artistic disciplines: music, drama, literature, audio-visual, graphic and visual arts. PPCA is associated with the major international recording companies — the Australian branches of Universal, Sony, and Warner Music are all on the PPCA Board together with two artist representatives, a manager representative and a licensor representative.
The emphasis in this article at this stage is on statistics. It reflects the main purpose of each society’s activities which is to achieve effective protection of members’ intellectual property, but does not attempt to discuss the appropriateness of these activities or any other issues. The societies are also active promoters of musical creation through other initiatives — full detail is available on their websites.1
For example, the APRA Board each year sets aside 1.75% of distributable revenue to fund projects and organisations promoting the use and recognition of music by APRA members. These projects have included opportunities associated with songwriting workshops, awards, peak organisations, special events and live showcases. APRA members are also very active in local and international songwriting and composing competitions. Another important APRA initiative is its continuing promotion of Aboriginal and Torres Strait Islander (ATSI) members.
Finally some APRA|AMCOS activity is due to the ongoing addition of new licence schemes, including the airline and fitness industries, commercial free-to-air television, schools, and operators of video-on-demand services in 2011-12. Planned schemes for 2012-13 included the subscription television industry and concert promoters. However, CEO Brett Cottle adds in his annual message for 2012 (p 9): “We expect to see a return to more normal growth levels in revenue receipts across the APRA and AMCOS businesses over the next year.”
The PPCA Performers’ Trust Foundation (established in 1975) provides non-recurring (one-off) grants to promote and encourage music and the performing arts. The grants are determined by four trustees of the trust. Believing that music is a crucial part of Australian culture, PPCA also supports a number of music initiatives, and supports upcoming Australian artists encouraging them to continue making music.
The first four sections below relate to APRA|AMCOS, the fifth to PCCA which is distinguished by a long-term trend of more than 20 years but has less annual statistical detail.
APRA|AMCOS Revenue Trends
Statistics on combined revenue in the two institutions are available in reports published on the Internet since the fiscal year ending 30 June 2000 (found in four annual reviews from 2008-09 to 2011-12). The published data are in current prices (“dollars of the day”); they have been adjusted throughout this article by a general indicator of inflation known as the implicit deflator of total consumption expenditure (base year 2010-11).2 Using this index increases the initial APRA|AMCOS revenue for 1999-2000 from about $110 million to $154 million, and reduces the value for 2011-12 slightly from $257 million to $251 million (Table 1).
The right-hand column of Table 1 shows rapid growth in real terms between 2002 and 2005 and some renewed growth from about 2009 to 2012. Chart 1 suggests that there has been quite a consistent linear trend over the 13 years covered by these statistics, but this actually indicates a declining growth rate measured in percentage terms.3
More detail remains available for APRA and AMCOS from the annual reviews currently on the Internet. Table 2 shows separate total revenues and expenses for the two organisations since 2007-08. These statistics shows significant differences in growth trends between the APRA and AMCOS operations. The growth rate in constant values was fairly modest for APRA, although total revenue did grow to 9.8% higher in 2011-12 than in 2007-08 despite a decline in 2011-12.
In contrast, AMCOS revenue increased by 36%. While this was partly due to a one-off increase based on an administrative change as explained below Table 3, removing this still leaves AMCOS with 24% higher revenue in 2011-12 than in 2007-08.
The total real revenue for APRA|AMCOS was 16.1% higher in 2011-12 than in 2007-08 (12% higher when adjusted for the one-off item). On the expenditure side (annual expenses varied between 12% and 13% for the two organisations combined), APRA showed an 11.9% increase while AMCOS costs increased by only 4%. Total net distributable funds in constant prices increased from $190 million in 2007-08 to $222 million in 2011-12, or by 17% (13.7% adjusted for the one-off item).
Chart 2 summarises the statistics, showing APRA as the major revenue earner but with AMCOS increasing its contribution from 23.7% of the combined total in 2007-08 to 26% in 2011-12 (the latter after removing the one-off item).
Details of APRA and AMCOS domestic revenue go some way towards explaining the difference (Table 3). The main revenue item for APRA is broadcasting (across a broad front according to the earlier annual reviews, the largest categories being free-to-air television and radio broadcasting, followed by subscription television and government broadcasting). It accounted for 58.3% of total APRA revenue in 2011-12, which was down from 65.4% in 2007-08 since the trend in real broadcasting revenue was at best flat over the period. The second-largest revenue categories were general public performances, and what APRA now calls “concerts and live”. These items accounted for 34.5% in 2011-12. Details for these items are not available for 2007-08 and 2008-09 due to reclassification, but it appears that strong growth was replaced by more modest growth in 2010-11, and then a decline in real terms in 2011-12.
The only significant growth item for APRA was digital and online, up from $3.4 million in 2007-08 to $9.4 million in 2011-12 — relative to APRA’s total domestic revenue the increase was from 2.4% to a still modest 6%.
In contrast, the two major growth items for AMCOS were:
- Digital and online, which increased from 22.5% to 41.4% of total revenue, showing a 165% increase in real terms from $10 million in 2007-08 to $26.8 million in 2011-12, and
- Broadcasting mechanicals (the right to make a recording as well as performing a work on broadcasting media), which doubled its share of total AMCOS domestic revenue from 10% in 2007-08 to 19.9% in 2011-12. The increase in real revenue was 187%.
Education was another growth item, though the increase was a more modest 38%, from $5.8 million to $8 million. The losers in the AMCOS basket were production music (-6% in real terms), business-to-business transactions (-30%), and physical recordings (-38% after removing the one-off item discussed above).
In summary, the revenue of AMCOS has benefited much more than APRA from the digital revolution in the recorded music industry. Its revenue at constant values, after adjusting for the one-off item, was 44.6% higher in 2011-12 than in 2007-08. The comparable figure for APRA was 10.6%, after its revenue declined marginally in 2011-12.
Payments to Authors and Publishers
Payments by APRA to writers and publishers increased by 15.6% in real terms between 2007 and 2011. Over the same period, the number of persons earning APRA royalties increased by 50% and the number of works in each annual distribution by 60%. Assuming the statistics are comparable — and all these numbers appear on the same page of the annual APRA|AMCOS review — the implication is that the average amount paid per person earning royalties declined from $737 in 2007 to $590 in 2011 (by 20%), and that the average number of works per person earning royalties increased from $2.78 to 2.97 (by 7%).
Explanation needed here (ED).
Location of Members
The initial “A” in APRA and AMCOS stands for “Australasian” rather than “Australian”, which primarily means that New Zealand is part of the business. Table 5 shows that 83.5% of members in 2012 lived in Australia, 14.4% in New Zealand, and 2.1% elsewhere.
The inclusion of New Zealand doesn’t affect the quality of these statistics — it just reflects a business decision to supply services to a very similar near-by market.4
Comparing the distribution within Australia with the distribution of the total population, however, reveals some interesting differences. Chart 3 shows the “relative difference” (defined in the footnote below Table 5 as the ratio of the percentage of APRA members residing in a state or territory, to the percentage of the total population residing there) between the actual and the expected distribution — based on population.
The relative difference is depicted in Chart 3, which shows that Victoria is home to a disproportionate number of APRA members (24% more than “expected” by the population distribution). There are also more APRA members than “expected” in New South Wales, and in the Northern Territory as well, which may be due to special APRA efforts to attract Indigenous members.5
Other states and the Australian Capital Territory have less APRA members than would be expected on a population basis. South Australia comes closest to “expectations”, falling 8% short, the ACT falls 13% short, and Queensland 18%. The greatest shortfalls were in Tasmania (26%) and Western Australia (30% — the latter state being home to 10.7% of Australian residents but only 7.5% of APRA members (7.5%/10.7% – 1 = -30%).
Age and Gender of APRA Members
The age question in the survey is not well designed for comparison with the total population. The lower age group covers “1-20” and the upper age group “51+”. It is plausible that the lower age group covers 16 years plus and that the upper age group cuts out at 65, which very roughly identifies the active workforce groups. Chart 4 suggests that this assumption is not only reasonable but conservative: only 3% of APRA members are less than 21 of age compared with 10% who could be in the employable workforce (but really go to school, college or university), and only 19% of APRA members are 51 years and older compared with 26% of the actual or potential workforce who are aged between 51 and 65.
Chart 4 shows clearly that the majority of APRA members are between 21 and 50 years of age, more than can conceivably be explained by any workforce definition. The discrepancy is particularly wide in the 31-40 group, comprising 30% of APRA members but only 21% of the “workforce groups”, as defined here. The difference would be even more pronounced if general workforce participation indicates a lower average maximum age than 65.
Almost four of five APRA members are male, compared with evidence from census and other official sources that the gender distribution of musicians is generally three males to one female, i.e., 75% males (Chart 5).
Long-term distributions, PPCA
The PPCA contains statistics of number of licences, revenue and distribution since 1990-91 (Table 6). The number of licences grew very rapidly in the 1990s to reach what may or may not prove to be a plateau around 55,000 by 2012. Chart 6 shows that the annual increase in the number of licences is described most accurately by a linear trend, suggesting that the growth rate has decreased over these two decades. This is plausible as licence numbers started to grow rapidly from a low base.
In contrast, the best fit for PPCA revenue is an exponential trend (Chart 7). This suggests that the growth rate has been more or less maintained. The distributions have not quite kept pace with this — the exponential trend value has exceeded the actual values on the chart since 2006. The percentage change columns in the right half of Table 6, however, suggest that the average annual change in recent years did match the increases in revenue — indeed the average annual change in distributions between 2006-07 and 2011-12 was a very decent 15% compared with 13% in revenue.
The pattern of percentage changes also helps to explain why the number of licences followed a linear trend (very high increases in the 1990s from a low base and only modest recent annual changes).6
The sum of distributions from APRA|AMCOS (Table 2) and PPCA (Table 6) was $250 million in 2011-12 (at constant 2010-11 prices). Some of these distributions went to other countries, mainly New Zealand. Distributions to Australian musical creators through these institutions totalled around $213 million, by any measure a significant figure.
Hans Hoegh-Guldberg. Entered on knowledge base 1 July 2013.
- Given the importance of such activities for the health of the music sector, we plan to include elaborations on the general promotion of musical activities by organisations associated with the sector in a future article. Contributions are invited, also on issues associated with the current activities of these societies.↩︎
- It is general practice in this knowledge base to express trends, whenever possible, at constant rather than current values or prices.↩︎
- Exponential growth occurs when the growth rate of the value of a mathematical function is proportional to the function’s current value (Wikipedia), a condition not met when a linear formula provides the best fit. The trend on Chart 1, measured by the compound annual growth rate (CAGR) formula from end point to end point averaged 4.8% per annum over the full period. The long-term statistics for PPCA (1990 – 2012) shown below suggest that the number of licences moved along a linear trend, but the financial trends moved exponentially.↩︎
- In an analysis of music sector economics generally, the contribution should be adjusted since only about five-sixths of the organisation is directed related to the Australian market.↩︎
- It is understood that APRA|AMCOS has a special program to do so. The knowledge base seeks more information on this.↩︎
- The long-term trends in Table 6 suggest that the role of PPCA as a collecting society was activated or reactivated around 1990. We have not established what its role was in the first two decades after it was established in 1969. Perhaps someone could enlighten us.↩︎
Hans founded his own consulting firm, Economic Strategies Pty Ltd, in 1984, following 25 years with larger organisations. He specialised from the outset in applied cultural economics — one of his first major projects was The Australian Music Industry for the Music Board of the Australia Council (published in 1987), which also marks his first connection with Richard Letts who was the Director of the Music Board in the mid-1980s. Hans first assisted the Music Council of Australia in 2000 and between 2006 and 2008 proposed and developed the Knowledge Base, returning in an active capacity as its editor in 2011. In November 2013 the Knowledge Base was transferred to The Music Trust, with MCA's full cooperation.
Between 2000 and 2010 Hans also authored or co-authored several major domestic and international climate change projects, using scenario planning techniques to develop alternative long-term futures. He has for several years been exploring the similarities between the economics of cultural and ecological change, and their continued lack of political clout which is to a large extent due to conventional GDP data being unable to measure the true value of our cultural and environmental capital. This was announced as a major scenario-planning project for The Music Trust in March 2014 (articles of particular relevance to the project are marked *, below).