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Re:Sound Annual Report: International Collections Are Up While Private Copying Revenues Plummet

Re:Sound, the Canadian performing rights organization that collects and distributes performance royalties for labels and performing musicians, has released its latest annual report, which details its financial performance for the previous year. The new report indicates that Re:Sound collected more than $50.6 million in 2018, which is down from $53.4-million in 2017. The organization did see a big boost in international collections, but domestic collections remained flat and the overall decrease is the result of a big drop in revenues from the Canadian Private Copying Collective (CPCC).

Re:Sound reports that there was a significant increase of 39% in international collections over 2017, to a new high of $9,622,273 million. This is up from $6,981,000 in 2017.

The Re:Sound 2018 Annual Report also says that the PRO’s distributions to rights holders in 2018 totaled $47.2 million, which it says is the largest distribution to music rights holders since Re:Sound’s founding in 1997. As well, the organization says its costs declined approximately 4% compared to 2017.

While international collections increased substantially, domestic income from neighbouring rights remained nearly flat. Re:Sound domestic revenue in 2018 was $38.4-million, compared to $38.58 million in 2017.

One area of significant revenue declines was private copying revenues from the Canadian Private Copying Collective (CPCC), which declined from $7.5 million in 2017 to just $900,000 in 2018. The CPCC collects tariffs on the sale of blank recording media, such as blank CD-Rs and cassettes, which have become a lot less popular in the streaming era.

For a more details breakdown of the Re:Sound 2018 Annual Report, go to 2018.resound.ca/en/financials/.

In September, Re:Sound announced that its president in since 2009, Ian MacKay, will be leaving the organisation at the end of the year.

Over the years, MacKay oversaw the implementation of key strategic initiatives including the creation and launch of Entandem, a joint venture with SOCAN which simplifies music licensing for businesses, the expansion of Re:Sound’s Board of Directors to be more reflective of Re:Sound's diverse stakeholders, and the addition of an Independent Chair.

And so, with that in mind, Canadian Musician also asked MacKay a few questions (and we also plan to have him on the Canadian Musician Podcast toward the end of the year to discuss his tenure and the music rights industry in Canada).

CM: After 10 years with Re:Sound, why are you moving on now?

Ian MacKay: While there’s never a perfect time to leave, I have every confidence in the senior management team’s ability to continue to drive things forward. The entire team at Re:Sound lives and works by our Core Values and we are passionately dedicated to the rightsholders (artists and labels) who we serve.

The organization is in a strong place. We launched Entandem, our licensing joint venture with SOCAN earlier this year, which will simplify music licensing and ensure that businesses are licensed efficiently and thoroughly. We are also overhauling our distribution systems to ensure we’ll continue to be best in class going forward.

Personally, this is my eleventh year at Re:Sound – the longest I have been at any one organization – and I’m a big believer in passing the torch at the right time.

CM: Over your tenure with the org, what was the biggest challenge you/Re:Sound faced?

MacKay: The music industry has faced incredible changes over the last decade which have brought both challenges and opportunities. Sometimes things are more fragmented than they should be. But the response to the challenges always becomes clearer if you take a creator-centric approach. It’s not about one organization – it’s about the strength of the ecosystem.

Educating and engaging music users to understand the value recorded music brings to their business, and engaging music creators in what can be a complex royalties universe have been important challenges and ones we’ve successfully addressed. Ten years ago, no one knew who Re:Sound was and what it did. We have worked hard to change that and ensure we are fully transparent and responsive to the music creator community.

CM: What are you proudest about in your time at Re:Sound?

MacKay: I’m proud of the value we’ve delivered to artists and labels - driving revenues up 250% and bringing costs down by 30%. I’m deeply proud of our Core Values – Fair, Performer and Maker Centred, Transparent, Efficient and Dynamic – and how each and every person at Re:Sound lives and works by these values every day.

I’m deeply proud of how many obstacles we’ve overcome to improve the lot of music creators.

CM: How would you compare the health of the Canadian music rights and royalties ecosystem now to when you arrived?

MacKay: It’s very different. In terms of the rights we oversee, ten years ago, Canadian labels and musicians were not receiving any income from the exploitation of their sound recordings in the US. In 2018, Re:Sound collected over $9 million from the US through our bilateral agreement with SoundExchange. Overall, the money collected by Re:Sound has become an essential part of the revenue mix for artists and labels to be sustainable.

We’ve also worked hard to simplify processes on the distribution side by moving to repertoire-based distribution for many of the rights holders we represent. Navigating the waters of a complex ecosystem (rights, royalties, micropayments) is a difficult task. At Re:Sound, we’ve really tried to make the process as accessible and transparent as possible. We believe that a well-informed, engaged artist or label is best able to navigate these waters. So, we endeavour every day to get them the information they need and to make things as straight-forward as possible. After all, it is their money, not ours. Today, about 50% of the royalties we distribute go through our member organizations (ACTRA-RACS, Artisti, MROC and SOPROQ), while the other 50% goes to artists and labels signed up directly with Re:Sound (or through bilaterals).

CM: What do you plan to do next, professionally?

MacKay: Stay tuned!

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Michael Raine is the Senior Editor at Canadian Musician. He is also a co-host of the popular Canadian Musician Radio weekly podcast.