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Canada’s SOCAN Reports Growth In 2019, Distributions Shrink Due to Tech Rollout

SOCAN, the Canadian performance right organization, reports that in 2019 its total collections grew 8.2% to C$405.6 million ($308 million) from C$375 million ($285 million), citing 37.6% growth in digital royalties to C$86.1 million ($65 million) from C$62.6 million ($47 million).

However, its distribution fell 6% to C$296 million ($225 million) in 2019 from C$315 million ($239 million) in 2018. The drop was attributed to a steep learning curve required for the company’s newly deployed technology to process international and television income.

Other results included domestic collections growing 10.2% to a record C$315.1 million, up from 2018’s C$296 million. So that means that international collections totaled C$90.5 million ($68 million), which represents a 2.2% increase from last year’s C$88.7 million ($67 million).

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Finally, the company says that mechanical royalties totaled C$12 million ($9 million) last year.

As part of its results, the company acknowledged that its move to diversify beyond performance rights collections begun in 2016 has not worked out to its satisfactions. So it says it’s taking steps to rectify that situation.

As part of that move, SOCAN said it registered a C$41.7 million ($31 million) impairment charge to its Dataclef subsidiary. But that charge have not impacted distribution, the organization said.

Dataclef includes its acquisitions of Audiam, which tracks songwriter royalties at YouTube and other digital services for songwriters; Medianet; and the Canadian mechanical licensing organization SODRAC — the latter apparently being the source of the aforementioned $12 million in mechanical collections.

“At the time of our investment in these operations, we were exploring new ways to support our members by creating other revenue streams and leveraging new technologies,” SOCAN interim CEO Jennifer Brown said in a statement. “Business plans didn’t come to fruition in the way we anticipated. Through the evaluation process, it became clear that we should divest ourselves of Dataclef assets.

Besides the sale of Dataclef assets, the SOCAN plan will result in a significant reduction in the organization’s overhead, the company report said. Meanwhile, Brown added, “We are, however, encouraged by significant success with our new technology system and our improved matching and processing capabilities.”

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According to the organization financial result announcement, going forward SOCAN’s management and board of directors are focusing on core work for member; and will stick to investments that will allow its team to focus on its core purpose of helping music creators and publishers thrive; and expanding domestic licensing of music.

A more detailed report on the organization’s financial is expected on Nov. 10, the day of SOCAN’s annual general meeting, which this year will be held online.