YEAR in REVIEW Australian Music Industry Based on a Strong the YEAR in REVIEW – Vision to Become a Globally Recognised Music Nation Powerhouse

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YEAR in REVIEW Australian Music Industry Based on a Strong the YEAR in REVIEW – Vision to Become a Globally Recognised Music Nation Powerhouse YEAR IN REVIEW Australian music industry based on a strong THE YEAR IN REVIEW – vision to become a globally recognised music nation powerhouse. MESSAGE FROM CHIEF Financial Overview A record year for APRA AMCOS with group EXECUTIVE DEAN ORMSTON revenue breaking the $400m milestone, Brett Cottle AM retired as CEO in June 2018 after 28 rising by 8.7% from $386.7m to $420.2m, an years presiding over a period of extraordinary increase of $33.5m on the back of continued change and growth for the organisation. Over strong growth in consumer demand for music the past 6 months there have been many delivered digitally. ‘farewell’ events and acknowledgements For APRA, gross collections rose by 10.4% to of Brett’s contribution to APRA AMCOS, $323.3m (excluding AMCOS management the wider rights management and fees), while AMCOS revenue rose 3.3% to music industries, both locally and $95.9m. internationally. I would like to add my Operating expenses across the group – personal further thanks to Brett for comprising APRA pro forma costs, system being a leader unparalleled, and a development related costs, costs of generous mentor. administering AMCOS and stand-alone This year’s report highlights the AMCOS costs – were $57.1m, up 13.1% strength of the organisation’s from last year’s figure of $50.5m. economic performance, breadth of Despite the increased system member service, and commitment to development spend APRA Net improving our industry’s ecosystem. Distributable Revenue – the amount Critical to the health of our sector is available for distribution to a direct conversation and relationship members and affiliated societies – with Federal and State governments. grew by 9.5% to $276.4m. Our message is simple, the contemporary The group’s overall expense to music industry is one of Australia’s most revenue ratio was 13.6%, an dynamic and innovative industries with increase on last year’s 13.1%, well barely realised export potential. We need within a range of international bipartisan and cross-portfolio support and competitiveness and high investment in realising the potential of the economic return to our members. Photo: Jacquie Manning 2 Contributing Factors Future Priorities For the first time, digital services licensing income became In July 2018 we welcomed our 100,000th member. Our future success the leading source of revenue for the Group, albeit with a will rest on our ability to provide world’s best service to our songwriter, margin of $1.9m, grossing $134.5m. Digital revenue has been composer and publisher members, and our licensee clients. We intend to be impressive with 31.9% year-on-year revenue growth from the business partner of choice for our writer and publisher members - from audio streaming services, and 30.4% in video on demand local to global, live to digital. (VOD) revenue. The immediate priorities for the organisation are the commissioning of Licence fee collections from broadcasters (radio and television, our new operational system, CLEF, and launching OneMusic Australia in free and subscription) remains strong, at $132.6m, up mid-2019. OneMusic Australia will build on the ground-breaking success marginally from the 2017 result primarily due to the reversal of of OneMusic New Zealand – now going into its sixth year - offering a joint the provision against Network Ten whilst under administration, licence with the record industry under one umbrella and delivering a simple and reversed due to the eventual sale to CBS in the financial and effective licensing service. In addition to a better service for licensees year under review. we forecast considerably increased market penetration and return for our Our Australian and New Zealand General Licensing teams members over coming years. eclipsed the previous year’s impressive performance with More immediately we have begun renegotiations of some of our major 10.4% growth in revenue. Revenue from Concerts and Events industry agreements in Australia and New Zealand, including free-to-air increased 24%. television, Pay TV, YouTube and New Zealand commercial radio. We will International revenue was slightly ahead of last year at lodge our application for reauthorisation with the ACCC in December this $43.7m, reflecting the continued success of Australian and year, with the objective of securing at least a three year authorisation, New Zealand songwriters on the global stage. We’re there effective 1 July 2019. to support and amplify that international impact for our With a clear view on the longer term, we will continue to take an industry members, with represenntatives on the ground in LA, Nashville lead on key issues that impact the music ecosystem. Importantly we and London; and we’ve recently launched creative and will continue our work on issues and opportunities, including; addressing business spaces for members travelling or relocating to these gender parity and diversity; local content; live music; music education; and songwriting hot spots. ensuring the strength of the copyright framework and our members’ right to APRA AMCOS’ multi-territory licensing of digital services equitable remuneration. on behalf of a number of publishers, and now the Swedish We have recently lodged our submission to the Federal Government’s society STIM, continues to be extraordinarily successful, and Inquiry into the Australian Music Industry, which provides an opportunity is indicative of our regional leadership and ability to provide to articulate to a cross government portfolio audience the issues and world’s best service. opportunities referenced above. In New Zealand we will submit to the In the year under review, expenses totaling $6.4m have been current review of copyright law and look to support the New Zealand incurred by the group on CLEF, our transformational system Government’s desire to exponentially grow the domestic music industry. re-development project – comprising the costs of internal We are well positioned as one of the world’s leading copyright management personnel and payments to the system developer, Accenture. organisations. I am honoured and excited to have the opportunity to lead The system is due to be commissioned in 2019 with the launch APRA AMCOS and a team that is focused on world’s best service delivery. of OneMusic Australia. 3 4 DIGITAL REVENUE REMAINS ROBUST Income from digital sources accounted for a staggering $134.5m, with robust growth continuing across the medium’s content categories: audio streaming, video-on-demand, and websites and User Generated Content (UGC). • Nearly one-third of all 2017-18 revenue • 21.9% more than the previous year • Digital growth outstripping physical sales decline Where to from here? With a current figure of 4.5m subscribers to paid services, growth potential of upwards of 90% household penetration across 10m households in Australia and New Zealand is plausible when compared to the historical uptake of TV and telephones. Facebook: a game-changing revenue stream APRA AMCOS’ landmark licensing agreement with Facebook will see Australian, New Zealand and international songwriters, composers and music publishers remunerated for the use of their music on Facebook, Instagram, Oculus, and Messenger. Whether a band releases their own music clip natively on Facebook, teases new music on Instagram, or a fan posts a video singing along to SIA, the rightsholders will potentially earn from that use. 5 LIVE MUSIC REVENUE Major international concert tours raise the profile and generate significant royalties for Australasian songwriters. Highlights from the past year include: Midnight Oil’s extensive Australasian national tour took them from Alice Springs to Auckland to Hobart to Hanging Rock and beyond, and they had 22 Aussie and Kiwi supports along the way including Something For Kate, A.B. Original, Adalita, Irrunytju Band, The Nudge and many more. Ed Sheeran had Missy Higgins as the major support on all Australian dates, and invited recent high school graduate Fergus James and Bliss N Eso along for opening slots. In NZ, Ed selected Mitch James, Six60, Drax Project, and Lost Bird. Foo Fighters - Ayn Randy, Cosmic Kahuna, Amyl and The Sniffers, DZ Deathrays, The Preatures, Clowns The Killers – Alex Cameron, Jack Ladder & The Dreamlanders Robbie Williams – Tami Neilson, The Bamboos Elton John – Busby Marou SIA – Amy Shark, Theia Harry Styles – Maddy Jane, The Preatures Imagine Dragons – The Temper Trap Queens of the Stone Age – The Lonely Boys, Ecca Vandal, C.W. Stoneking The National – Tiny Ruins Prophets of Rage – Alien Weaponry, Bare Bones, Dead Letter Circus Grace Jones - Estere, Silentjay & Jace XL Photo: Yana Amur 6 APRA AMCOS REVENUE BREAKDOWN 2017/18 VS 2016/17 % 2018 7 ONEMUSIC AUSTRALIA • OneMusic Australia is scheduled to go live mid 2019 after two years of consultation. • ONE metric of measuring music use per sector. ONE renewal date. ONE licence. ONE payment. E-commerce option. • 25 new schemes will launch, across most industry sectors. • APRA AMCOS will operate OneMusic Australia under a joint management committee of APRA AMCOS and PPCA executives. • PPCA and APRA AMCOS have agreed on how the revenue should be split - generally 50:50. • 160,000 businesses to re-license across FY 2020 plus maintain normal new business licensing. • We will collect on rights that have always been owing to us, close loop holes and over time increase our market penetration. • Business who are now unlicensed for one right or under-licensed will find it easier to regularise their coverage to ensure they are properly licensed for the music they use. • A win-win for everyone involved in the value chain. Disappointing that some sectors have taken this as an opportunity to attack the rights of creators and attempt to wind back licence fees. ONEMUSIC NEW ZEALAND • OneMusic revenue growth enabled higher APRA and Recorded Music NZ distributions to their stakeholders. • Hospitality and exercise industries remain steady - significant contributors to revenue for OneMusic New Zealand.
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