I’ve been a longstanding fan of research consultancy MIDiA who regularly produce reports on the music, media and tech sectors; distilling smart insights from data and predicting future trends.
 
I was asked to contribute to the latest report by Mark Mulligan on the Sync Market. It’s a tough challenge as data isn’t so readily available. Both buyers and sellers closely guard transaction values. That said, MIDIA has uncovered some interesting stats and made some telling observations about how the market currently operates.
 
You can read the top-line details HERE and HERE though I’d encourage you to buy the full report.
 
A Change Is Gonna Come (…. or not)
Mark’s key assertion is that the sync market is “a self-satisfied industry with a modest appetite for change”. I don’t dispute this. Having started my sync licensing career at Zomba Music Publishers in 1994, the manner in which deals are brokered for advertising usage hasn’t changed much, other than email replacing fax as the means of sending offers back and forth. Given transaction values frequently run into high five figure and low-medium six figure sums, the process is not dissimilar to a residential property transaction. Mark rightly highlights that, despite the efforts of many tech vendors to automate the process, rights owners are very reluctant to cede control of negotiation. Add in the fact that almost every title requires artist and writer approval via multiple rights owners, licensing music for ads remains a steadfastly manual process reliant on personal relationships between buyers and sellers. As broker acting for advertisers, our relationships with record labels and publishers are vital to securing deals for our clients. 
 
What does this mean for brands?
Whilst there are many tech vendors with great propositions in music search and catalogues of pre-cleared emerging artists, for well-known tracks and catalogues owned by corporate rights owners, the licensing process for advertising use is unlikely to become automated anytime soon. Proper due diligence and smart procurement processes remain ever important.
 
Lucky Number
Mark Mulligan presents some interesting stats about the global value of the sync market from which we can distil the importance of advertisers to music rights owners:
 

What does this mean for brands?
In traditional music retail and now streaming, record labels have always been the dominant player, taking the biggest slice of the revenue pie compared with music publishers. In the sync market, the situation is reversed. Music publishers collect licence fees irrespective of the recording used. Re-records are of course very prevalent which negate licence fees paid to record labels.  

For music publishers, advertisers’ budgets are putting in excess of US$0.5 billion into their coffers. For brands, that clearly offers scope for leverage in negotiations when combined with smart procurement strategies.

For What It’s Worth
Mark Mulligan presents some interesting insights on pricing which may offer opportunities for advertisers:

• Buyers and sellers appreciate how sync impacts artists’ visibility, driving significant spikes in streaming.
• Buyers’ budgets are stretched as more content is needed across ever expanding platforms.
• Long-term downward trend in sync licence fees.
• Buyer’s market dynamic given oversupply of tracks and rights owners’ keenness to secure placements.
• Uneven fee distribution as A-list artists command premium fees, especially in the US. Mid and lower-tier artists have seen fees fall.

What does this mean for brands?
From consulting projects for US clients, I regularly see high fees paid for famous tracks by A-list artists, especially those controlled by major labels and publishers. In some cases there are truly eye-watering sums for classic songs. Ad agencies will frequently recommend a “Rolls Royce” solution given it’s not their money on the line. Smart brands should question the effectiveness of such large investments. We always recommend that ad agencies be mandated to present options from low and mid-level artists whose music may work equally well with the creative. There are significant efficiencies available for advertisers who look beyond the obvious music choices. 
 
 
My thanks to Mark Mulligan, Keith Jopling and all at MIDiA for producing a fascinating report and permission to share some of its findings with you.