SOCAN today announced final 2019 financial results, including record domestic and international collections for the company's member music creators, music publishers, and visual artists. The company also announced significant financial losses due to past investments in the acquisition, creation, and financing of the new business venture Dataclef Inc.
Highlights of SOCAN's 2019 results:
- $405.6-million in total collections – an 8.2% increase compared with 2018.
- Record-setting domestic collections of $315.1-million – 10% more than 2018.
- A 2.2% year-over-year increase in international royalty collections ($90.5-million).
- A 37.6% increase in revenue from digital sources ($86-million).
- Reproduction rights collections increased to $12-million.
Distributions to members totalled $296-million, a 6% decrease compared with the $315-million distributed in 2018. The disparity was due primarily to the steep learning curve required for the company's newly-deployed technology to process international and television income. SOCAN says significant progress has been made in these areas in 2020, as it continues to leverage this new technology to meet the data-intensive demands of the streaming age.
In 2016, SOCAN through its wholly-owned subsidiary Dataclef Inc., embarked on a plan to implement the organization's strategic vision. The 2019 financial results include losses that resulted in an impairment of $41.7-million to the advances made by SOCAN to fund its subsidiary operations since 2016.
"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," says interim CEO Jennifer Brown. "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. We are, however, encouraged by significant success with our new technology system and our improved matching and processing capabilities."
SOCAN says that through evaluation and analysis, it has developed a plan to manage the losses, which have not impacted distributions.
Aspects of the plan include the sale of Dataclef assets, a significant reduction in SOCAN's overhead expenses, a reorganization of the Dataclef operation, and new management leadership, all of which have already been put into action.
SOCAN's management and Board of Directors have also committed to sharpening the company's focus on core work for members: expanded domestic licensing of music; continual improvement of the depth, accuracy, and speed of royalty distributions; and investing in ways that will allow its team to focus on its core purpose of helping music creators and publishers thrive.
The accounting firm Grant Thornton LLP has reviewed SOCAN's financial plan to manage the financial impairment and has provided SOCAN with its support.
SOCAN will hold its annual general meeting online on Nov. 10, 2020, to discuss the organization's 2019 results and financial plan in detail. The meeting is available online to members of the organization who earned royalties in 2019. SOCAN's 2019 annual report and financial statements audited by KPMG will be made available in concert with the meeting.