Merlin Reveals $353 Million in Payments to Label Members, a 52 Percent Jump

Courtesy Photo
Charles Caldas

Merlin said on Thursday that payouts to its 700 indie label members rose 52 percent to $353 million during the year ended March 2017, up from $232 million in the prior year.

Its overall revenue has grown considerably, compared to back when streaming was still in its infancy, and Merlin's payout to member labels totaled $42 million for the year ending March 2013.

As part of its operation, Merlin polls its label members every year about business conditions; and Merlin CEO Charles Caldas presented the results of that survey today at the A2IM annual conference, held in New York City. Merlin's 700 label members operate in 39 countries and combined have an estimated 12 percent of the global digital recorded music market, according to Merlin.

Merlin is a global rights licensing and collection agency that collectively represents indie labels in negotiating deals with digital services that allows the service to offer the recorded masters of the Merlin labels to their subscribers. In turn, the services pay Merlin royalties, which funnels the money back to the labels, based on pro-rata plays.

For the year ended May 2017, most labels reported that their business had grown from 2016's levels, with only 14 percent of labels saying their overall business revenue decreased from year-end 2016. Merlin tracks June to May for its survey.

Looking at the business another way, 42 percent of labels said that over half their digital revenues originated from outside their home territory. That's up from 39 percent in 2016.

Overall, 67 percent of labels say that all digital revenue -- whether from downloads or streaming -- now accounts for over half of their overall business, which includes physical sales too.

Looking at the digital channel only, in 2015, only one-third reported that their audio streaming subscription business was over 50 percent of their digital revenue. In 2017, that doubled to 64 percent of labels claiming streaming as accounting for over 50 percent of their business. In 2016, half the labels had reached the point where streaming accounted for over 50 percent of digital revenue.

Moreover, 29 percent of labels reported that audio streaming accounted for over 75 percent of their digital revenue.

Meanwhile, video-based streaming services are not producing the same kind of growth and appear to have stalled, even though use of video appears to be growing. About 84 percent of Merlin members say that video streaming accounts for less than a quarter of their overall digital business, the same level as last year. Within that, 42 percent, or half of the labels that comprise the 84 percent just mentioned, say that video-based services account for less than 5 percent of their digital revenues.

Meanwhile, 19 percent of members responded that downloads still account for over 50 percent of their digital revenue, while 39 percent of member labels say that downloads now account for less than 25 percent of digital revenue.

Looking at the future, 83 percent of members say they were optimistic about the future of their business, while only 6 percent were not optimistic.