Merlin Has Now Paid Out $2B to Indie Partners Following Biggest Year to Date

Courtesy of Merlin
Charles Caldas

Sale of Spotify shares accounted for more than $130 million of last year's $845 million in distributions.

Merlin paid out distributions of $845 million during the 12-month period ended March 31, a 63.1% increase over the prior year's $518 million given to indie labels using the organization for licensing and collections.

Within that distribution increase, more than $130 million came from the sale of Spotify shares gained from Merlin's licensing deal with the digital service as well as other things like legal settlements. 

"I am delighted to report another record-breaking increase in payments to our global membership," Merlin CEO Charles Caldas said in a statement. "What's particularly gratifying is the inclusion of more than $130m in monies that members would not have captured were it not for Merlin's formation. These are significant revenues that underline the incremental value Merlin brings to our global membership."

Merlin CFO Helen Alexander added, "Every cent that Merlin received from the sale of Spotify shares was paid out quickly, pro-rated on a track-by-track basis, and with 100% transparency."

So without the Spotify payout and revenue from litigation, that means that Merlin's overall revenue from the plays its labels and artists receive from on-demand digital services grew to almost $715 million last year, an increase of nearly $200 million from the prior year, or a 38% rise.

Merlin grew from $138 million in 2014 to $232 million in 2015, and increased it to $353 million in 2016. Add the last two years' tallies, and the company has paid out to its indie labels a total of $2.086 billion during that five year period.

According to Merlin, it took nine years for the organization to distribute the first $1 billion; while only taking 18 months to pay out the second $1 billion.

"That we can deliver such payments is testament both to the collective strength of our members' repertoire, and Merlin's ability to deliver best-in-class licensing alongside fully equitable and transparent reporting and payments," Caldas said. "It means Merlin's members can report quickly and accurately to their artists and clients, that they can thrive as truly independent businesses, and invest even further in the creation and development of new music."

Merlin said it added 141 member companies to its base during the year and now represents indie labels in 63 countries. While it didn't disclose total membership, last year the company said its organization represented 800 member companies with 20,000 label and imprints in 55 countries. It also says its licenses more than 25 digital service providers on a global basis. Overall, Merlin claims 12% of the digital recorded music market, on a global basis.

In its annual survey collected from indie labels and distributors in 35 countries, it found that 81% of its members enjoyed growth in their business for 2018, with 30% of those surveyed saying their overall business was up more than 50%. In the prior year, 67% of respondents said their companies had enjoyed growth in 2017.

About half of the respondents said audio streaming now accounts for over 75% of their digital income, whereas in the prior year 37% said that was the case. On the other hand, video steaming "remains static," according to the Merlin report.

Looking outside the home markets of respondents, 32% said the U.S. offers the greatest potential for increased digital growth, while 15% cited as offering the greatest potential. In 2018, Merlin agreed to non-exclusive partnerships with Tencent, Alibaba and NetEase. Meanwhile, Brazil is currently Merlin's fifth most valuable territory and Mexico is in its top 10, according to the organization.

Merlin chief commercial officer and general counsel Charlie Lexton said in a statement in the Merlin digital report that emerging marketing are "continuing to gain traction -- notably in China, Russia, India and across Africa. Merlin's ambition is to be active in all these territories and to help lay foundations for our members' future growth."

Meanwhile, with streaming still a relatively new phenomenon in Japan, Merlin's GM Akira Nomoto said the country is adapting fast; while Merlin director of global member services said that the organization overall had a 6% membership growth with Japan being responsible for the second largest set of incoming members.