There is no doubt the business of production music is experiencing some core transformations, and where it's all leading still remains to be seen. Evidence and arguments exist that support both optimistic and doom & gloom scenarios.
Let's start with the foreboding stuff...
ROYALTIES & THE ECONOMY
The most troubling sign has been the recent sharp decline in royalty payments. No one seems to know exactly why this is occurring. I've heard that likely culprits include subscriptions, royalty free libraries, and low streaming royalties.
But there's also another possible contributing factor - the economy. I've heard rumblings that some clients have been late in paying sync fees and royalties. If I were to guess, I'd say this is a direct result of the current economic downturn. Businesses across the board are suffering right now and media companies are no exception.
Here's a list of some prominent media companies and the number of employees they've laid off in 2023:
Amazon Studios/Prime: 100
AMC: 200
BuzzFeed: 180
The CW: 40
Dick Clark Prod: 15% of workforce
DirecTV: 1000
Disney: 7000
NBCUniversal: amount unknown
Netflix: 550
NPR: 100
Showtime: 120
Paramount: 100
Roku: 200
SiriusXM: 45
Spotify: 600
Vice media: 100
Vimeo: 1200
Warner/Discovery: 700
And of course, there have been tens of thousands off employees laid of by tech companies such as Google, Facebook, Twitter, etc... Mass layoffs are a last resort for most organizations, and laying off 5% or more employees is a drastic move and a clear indicator of financial trouble.
Layoffs are a result of reduced revenues, and a big chunk of revenue for most of these companies comes from advertising. I've read reports that advertising spending is down across the board. This means fewer ads and commercials are being produced.
All of this eventually trickles down to us composers. Not only are music payments impacted by financially struggling media companies, but also from advertisers who are spending less on ads.
I suppose the good news in all this, is that economic downturns are usually temporary and not indicators of long term devastation. So as the economy recovers, hopefully it will extend down the line to media composers.
GENERATIVE AI
Looking a little further down the road, there is the spectre of AI-generated music. Like it or not, it's going to happen. All it takes is for AI-generated music to secure a few prominent placements, and people will suddenly be open to the idea that it's feasible, and the dam will burst wide open. In fact, for all the media companies and advertisers who are struggling in a financial bind, AI-generated music could help improve their bottom line by eliminating royalty payments and sync fees.
Human-generated music won't go away, but AI is likely to encroach on a lot of existing music opportunities. Bear in mind, generative AI is constantly improving. Right now it's in its primitive stages, but there are people working round the clock constantly improving it. There's big money behind it, betting on its success.
COMPROMISED LICENSING
Subscription models, direct licenses, gratis licensing, and royalty-free libraries are the other unavoidable factors in reducing composer revenue. Unfortunatley, there's not much that can be done about it. Let's just hope the UPMs, APMs, KPMs of the world continue to court the big players and secure lucrative licenses.
Okay, that was all the doom & gloom stuff... what about the positive side of things?
PRODUCTIONS CONTINUE
Although media companies may be going through financial pains, broadcasts still continue and shows and movies will still continue to get made - all of them backed by substantial budgets. The entertainment industry is generally immune to the ups and downs of the overall economy. So while individual music payments might be down, opportunities for music licensing should continue to be available.
----edit----
Unfortunately, this may not be entirely true. See my next post for some articles that paint a more grim picture
POSTIVIE OUTLOOK
I'm consistently hearing messages of optimism and positivity from publishers and labels. So regardless of economic conditions and the threat of AI-music, music insiders seem to have a confident outlook for the future of production music. Perhaps they're being blind to certain realities, or don't want to acknowledge the business is in trouble, but the messages I'm getting are all very positive.
Let's hope they're right