sacem
ASCAP and SACEM are expanding their existing relationship into an alliance that will allow them to invest together in data technology and collect directly from streaming services in more foreign markets, plus launch an AI task force and encourage collaboration among songwriters. Since 2022, SACEM has collected money from online services in foreign markets for ASCAP […]
For the past several years, the organizations that collect public performance royalties have been growing far faster than most of the music business, especially in Europe. Revenue at the French collective management organization SACEM rose 34% in 2022, while its UK counterpart, PRS for Music, doubled its revenue since 2014. The growth is fast enough to make the whole alphabet soup of initials exciting to the point of attracting investment-backed rivals to the traditional nonprofits — think BMI, which just took on outside investment, or Kobalt’s AMRA.
Until about a decade ago, the traditional collective management organizations, known as CMOs, licensed rights within a given territory for compositions played in public — at concerts, in stores and restaurants, on television and radio, and eventually from streaming services. (Some also collect for mechanical rights or neighboring rights and remit that to rightsholders through related organizations.) And while European CMOs still do that, for the last decade they have also competed against one another to represent and license online rights in Europe and some other territories (not including the U.S.). This has made the most complicated part of a complex business even harder to understand, since it allows publishers and songwriters to assign different kinds of rights in different territories to different CMOs. In the U.S., for example, songwriters can join ASCAP or BMI, then assign certain rights in other territories to different organizations, in order to collect that money directly instead of indirectly, although only very successful creators tend to do this.
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As the pandemic subsided in 2021, CMO growth turned to hypergrowth, fueled by increases in online revenue, the reopening of restaurants and stores, and the roaring comeback of the concert business. The annus mirabilis was 2022, especially for the European societies that represent the most U.S. repertoire: SACEM grew 34%, PRS 23%, Sweden’s STIM 20% and Germany’s GEMA 13%. Now growth is coming down to earth, but it’s still healthy — last year, revenue grew 5% at SACEM (where distributions grew 19%), 12% at PRS, 8.4% at GEMA and 14.2% at STIM. So I was eager to write a column about how important this is for songwriters and the music publishing business that supports them, what this means for the future, and how creators can figure out which CMO would be the best for them. Instead, I ended up spending a few days staring into an abyss of uncertainty.
Growth in CMO revenue means that either the publishing business is growing, a given CMO is faring better than its competitors, or some mix of the two. But although the European Union mandates transparency, each CMO accounts for revenue so differently that it’s very hard to compare them. For example, STIM categorizes revenue collected from online licenses in foreign territories as “foreign income”; SACEM considers this “online”; while PRS treats this income as online when it licenses rights directly and foreign when it doesn’t. It gets considerably more complicated from there.
As competition among societies heats up, the most important few are pulling away from the rest. PRS, GEMA and STIM operate ICE as a Berlin-based pan-European licensing hub, and most publishers and other societies license online rights in Europe and other countries either through it or SACEM, which is a hub in its own right. That means at least some of the growth at those societies is coming at the expense of their European competitors, although it’s hard to tell how much.
Even as CMOs compete, they also cooperate in various ways — including remitting money to one another. Some of the success of societies actually depends on their rivals: GEMA members will make more if SACEM maximizes the money it collects on their behalf in France, for example. The closest analog I can think of is world trade, where countries drive prosperity by boosting the success of their counterparts while also trying to outcompete them. Consider that every CMO wants to account to its members faster than its rivals, but final accounting is only possible once numbers come in from other markets. It’s a game that can only be won by both beating and boosting rivals. At this point, the abyss starts to stare back.
Perhaps since the CMOs depend so much on one another, the top executives agreed on a few points — most important that growth will come back to earth and that as it does, cost efficiency will become more important. “I think we will continue to see growth but not at as fast a pace as during the pandemic,” STIM CEO Casper Bjørner told me. As that happens, “I think cost ratio becomes really important,” GEMA CEO Tobias Holzmüller added, referring to the percent of revenue that goes to expenses, which has historically been between about 10% to 15% and is generally declining. And since the CMOs collect relatively similar per-play payouts from streaming services, Holzmüller said, “You compete on cost and services.”
SACEM CEO Cécile Rap-Veber said the same: “What matters to me is value for our members.” PRS CEO Andrea Czapary Martin has also prioritized efficiency, setting a goal of getting the PRS cost ratio below 10%, which it did in 2023 for the second year in a row, in addition to cutting its administration rate for royalties from online services by 20%. “We can do this,” Martin said recently, “because we are surpassing our targets.” The idea is that, amid the accounting chaos, cost ratio might emerge as a comparison that’s easy for songwriters and publishers to measure.
Cost ratio may be an easy way to compare CMOs — but even that gets complicated because different sources of royalties come with very different costs. For example, general licensing revenue for music played in stores or restaurants is relatively expensive, since signing licensing deals with new businesses is relatively labor intensive. Revenue that comes in from online services costs less, while income from foreign counterparts is cheaper still. That gives an advantage to CMOs that depend more on foreign revenue relative to their size — and it helps STIM and PRS reduce their costs. (This isn’t the whole story; these societies are also very well-run.) It also makes SACEM’s 10.76% cost ratio even more impressive.
For all their competition, in fact, the big European CMOs aren’t always even playing the same game. STIM gets 73% of its income from foreign and online royalties, so to some extent its success is tied to that of Swedish songwriters who write for global pop stars, although it has to make sure they can’t get a better deal from another CMO. GEMA is at the opposite end of the spectrum — more than a third of its revenue comes from general and concert licensing, for which it takes in more than its rivals, presumably partly because the German economy is the biggest in Europe. PRS collects more online and foreign income, partly because English-language repertoire travels globally. SACEM, the oldest CMO and the biggest outside the U.S., benefits from operating its own hub. Breaking this down to determine the best deal for a given creator gets even harder, and it may just depend on which of those specialties offers the most appealing advantage.
That doesn’t mean competition isn’t working, though — even if some executives said that they measure themselves against their performance in previous years more than that of rivals. “Competition has forced a lot of us to improve our efficiency,” Rap-Verber told me when SACEM announced its results. And that benefits creators who join any CMO.
At European collective management organizations (CMOs), the hits just keep on coming. On Wednesday (June 5), SACEM announced record results for 2023, with collections up 5% to €1.49 billion ($1.6 billion based on the 2023 average euro-to-dollar conversion rate) compared to the previous year and distributions rising 17% to €1.23 billion ($1.33 billion). The French CMO also announced that its board has voted unanimously to extend Cécile Rap-Veber’s term as CEO.
The results come amid a thriving period for European CMOs. In April, GEMA, the German collecting society, announced that revenue rose 8.4% in 2023 to €1.28 billion ($1.4 billion). PRS for Music in the United Kingdom followed at the end of May, disclosing 14.2% revenue growth to £1.08 billion ($1.34 billion). However, in both of those cases, as well as SACEM’s, the results followed years of more substantial growth fueled by music fans eager to get back to seeing live shows in the wake of the pandemic. A year ago, for example, SACEM announced that it had taken in €1.41 billion ($1.54 billion) in 2022 — 34% more than it did the prior year.
Slower growth seems to be bringing with it a focus on controlling costs, and SACEM’s ratio of expenses to revenue collected is 10.76%, the lowest in its history. “What matters to me is the best value for our members,” SACEM CEO Cécile Rap-Veber tells Billboard. She adds that a more efficient disbursement of royalties boosted growth in distributions beyond that of revenue, saying: “We are distributing faster and faster.”
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The biggest source of revenue for SACEM was online, which rose 13% to €557 million ($602.67 million). The second biggest source was general royalties — a category that includes places where music is central, such as concerts, as well as places where it’s not — which was up 18.5% to €388 million ($420 million). Finally, broadcast rights, including TV and radio, brought in €318 million ($344 million).
Over the past few years, Rap-Veber has helped modernize the French CMO with an initiative known as “SACEM 3.0,” with a focus on delivering results at a reasonable cost.
“2023 was a year of confirmation in the implementation of our major strategic priorities,” Rap-Veber said in a statement. “We continued our transformation into Sacem 3.0 and worked to improve efficiency, ensuring the sustainability of our management account and optimising both our collections and the amount distributed to our members.”
More than ever, CMOs are competing for online rights — but also, on some level, for bragging rights. ‘Competition,” says Rap-Veber, “has forced a lot of us to improve.”
To judge from the results of a report commissioned by GEMA and SACEM, the specter of artificial intelligence (AI) is haunting Europe.
A full 35% of members of the respective German and French collective management societies surveyed said they had used some kind of AI technology in their work with music, according to a Goldmedia report shared in a Tuesday (Jan. 30) press conference — but 71% were afraid that the technology would make it hard for them to earn a living. That means that some creators who are using the technology fear it, too.
The report, which involved expert interviews as well as an online survey, valued the market for generative AI music applications at $300 million last year – 8% of the total market for generative AI. By 2028, though, that market could be worth $3.1 billion. That same year, 27% of creator revenues – or $950 million – would be at risk, in large part due to AI-created music replacing that made by humans.
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Although many of us think of the music business as being one where fans make deliberate choices of what to listen to – either by streaming or purchasing music – collecting societies take in a fair amount of revenue from music used in films and TV shows, in advertising, and in restaurants and stores. So even if generative AI technology isn’t developed enough to write a pop song, it could still cost the music business money – and creators part or even all of their livelihood.
“So far,” as the report points out, “there is no remuneration system that closes the AI-generated financial gap for creators.” Although some superstars are looking to license the rights to their voices, there is a lack of legal clarity in many jurisdictions about under what conditions a generative AI can use copyrighted material for training purposes. (In the United States, this is a question of fair use, a legal doctrine that doesn’t exist in the same form in France or Germany.) Assuming that music used to train an AI would need to be licensed, however, raises other questions, such as how many times and how that would pay.
Unsurprisingly, the vast majority of songwriters want credit and transparency: 95% want AI companies to disclose which copyrighted works they used for training purposes and 89% want companies to disclose which works are generated by AI. Additionally, 90% believe they should be asked for permission before their work is used for training purposes and the same amount want to benefit financially. A full 90% want policymakers to pay more attention to issues around AI and copyright.
The report further breaks down how the creators interviewed feel about using AI. In addition to the 35% who use the technology, 13% are potential users, 26% would rather not use it and 19% would refuse. Of those who use the technology already, 54% work on electronic music, 53% work on “urban/rap,” 52% on advertising music, 47% on “music library” and 46% on “audiovisual industry.”
These statistics underscore that AI isn’t a technology that’s coming to music – it’s one that’s here now. That means that policymakers looking to regulate this technology need to act soon.
The report also shows that smart regulation could resolve the debate between the benefits and drawbacks of AI. Creators are clearly using it productively, but more still fear it: 64% think the risks outweigh the opportunities, while just 11% thought the opposite. This is a familiar pattern with the music business, to which technologies are both dangerous and promising. Perhaps AI could end up being both.
Deezer is partnering with French collective management society SACEM to explore the potential impact that “artist-centric” streaming royalty payment models will have on remuneration for songwriters and publishers.
In a joint announcement on Wednesday (Oct. 25), Deezer and SACEM said they were carrying out an “in depth” study that will analyze streaming data to evaluate the viability of different economic models “aimed at remunerating songwriters, composers and publishing rights owners more fairly.”
A representative for Deezer tells Billboard that the first stage of the study commenced earlier this month using data from paid subscription accounts in France in the first quarter of 2023.
The next stage of the project, which is expected to last several months and focuses purely on the French digital music market, will see Deezer and SACEM specifically evaluate the impact that an artist-centric streaming model would have on the society’s 210,000-plus members and international partners, which include Universal Music Publishing Group and Wixen Music Publishing, as well as collective management organizations (CMOs) SOCAN and ASCAP.
“Songwriters, composers and publishers play a crucial role in the music industry as the creative driving force behind the songs we love, and it’s time to evolve how we reward these efforts,” said Deezer CEO Jeronimo Folgueira in a statement.
The joint initiative comes less than two months after Deezer announced it was partnering with Universal Music Group (UMG) on what it calls an “artist-centric music streaming model” for recorded music.
The new artist-centric model for recorded music replaces the traditional pro-rata model whereby one stream equals one play and the total number of plays is divided up by artists and labels according to how many they each accrue.
Since launching Oct. 1, the model has been exclusively limited to France, Deezer’s home market, and, so far, only applies to artists signed to UMG and French independent label Wagram Music. However, a spokesperson for Deezer says discussions are ongoing with all labels and content providers and that the company plans to have achieved “a full rollout with all providers and countries” in 2024.
The new model promises royalty “boosts” for “professional” artists whose music is actively searched for by users, as well as boosts for artists who maintain a level of 1,000 streams per month from at least 500 unique accounts.
It also includes a monetization cap of 1,000 streams for each user, meaning that every single user’s contribution to the royalty pool is counted as 1,000 plays no matter what the actual amount is. (If a subscriber listens to 2,000 streams, for example, then their streams will count half.) Deezer says the cap will help tackle fraud and ensure that royalties are shared more fairly between artists and rights holders.
Following in Deezer’s footsteps, Spotify is understood to be planning similar changes to its streaming royalty model that will come into effect in 2024. These are reported to include introducing minimum annual stream thresholds and financial penalties for music distributors and labels committing fraudulent acts, as well as a minimum play-time length for non-music tracks, such as bird sounds or white noise, before they can generate royalties.
Over the past two years, several other streaming services, including Soundcloud and Tidal, have either introduced or announced that they are exploring different economic models to the standard pro rata streaming model following criticism from creators over low royalty payouts.
In a statement, SACEM CEO Cécile Rap-Veber said the launch of the study into how alternative remuneration models will impact publishers, authors and composers was an “essential” development, “which we hope will make it possible to increase the value of streaming for our members.”
“There is a myth that at the SACEM restaurant, there are people serving food with white gloves and an orchestra playing,” the organization’s CEO, Cécile Rap-Veber, says with a hint of amusement in her voice. “It is a good story, but it is not true.”
Rap-Veber, who joined SACEM in 2013 and got the top job in 2021, is referring to what she calls its “old-fashioned” reputation. SACEM, which stands for Société des Auteurs, Compositeurs et Éditeurs de Musique, was founded in 1851 after composers Ernest Bourget, Victor Parizot and Paul Henrion refused to pay their bill at the Paris cafe Les Ambassadeurs until they got paid for the use of their compositions there. It became the first music collecting society, as well as the model for those that followed, and over the years, it grew into something of a French cultural institution: important, successful and perhaps overly aware of it.
Rap-Veber is not running your père’s SACEM, however. As a result of European Union (EU) legislation, collective management organizations (CMOs) in Europe now compete to represent and license online rights throughout the continent (and in some other countries) on behalf of songwriters and publishers. “We are now a global society,” she says.
SACEM still licenses public performance rights in France, but it now competes with other societies, most significantly ICE — a licensing hub owned and operated by the U.K. CMO PRS, the German GEMA and the Swedish STIM — to license works to online services in many international markets. (The United States is not one of them, but SACEM represents online rights in many markets for ASCAP and Universal Music Publishing Group, among others.)
Rap-Veber has pursued a “SACEM 3.0” strategy that she describes as “maximizing rates and minimizing costs,” plus offering new services like URights, which can track the use of music internationally, and MusicStart, which lets creators register their works on a blockchain-based system.
A statuette celebrating the diamond certification of the soundtrack to the 2006 movie musical Le Soldat Rose.
Matthew Avignone
These strategies appear to be working. In June, SACEM announced that 2022 was its best year ever. CMOs across Europe are benefiting from the return of live music and growth in streaming. But SACEM grew more than its peers — its collections increased 31% in 2022 to 1.4 billion euros ($1.5 billion). Even as growth boosts the entire sector, “I have to prove that we deliver the best services at the best cost,” she says. “And honestly, I think we can prove that.”
Congratulations on setting a record for SACEM.
It might be a worldwide record as well. And there is nearly 300 million euros [$328.8 million] more on top of it. In France, we collect neighboring rights [royalties for sound recordings] and private-copy levies [on blank media, which are distributed among rights holders in various businesses] for all the culture industries. So if I talk about the performance of our team, it’s not 1.4 billion euros — it’s 1.7 billion euros [$1.9 billion]. And when I look at the first quarter of 2023, that’s also very good.
Why so good?
In the first quarter of 2022, France still had some COVID-19 restrictions, and then the summer and the rest of the year were great. We also have new agreements — with Hipgnosis, with [Hungarian CMO] Artisjus to collect online, and with ASCAP — plus renewed agreements with better rates, especially for online. And now we collect [for online uses] in more than 150 countries directly.
You talk about running SACEM like a business. Is that a reflection of the competition among the various societies?
There was a time when there was a kind of monopoly in each country. There was no consciousness of the cost because there was no competition. Then the European Commission said any rights holder can withdraw his rights for online uses, and suddenly we were in competition. And we have the highest tariffs in the world.
Rap-Veber’s husband made this painting from a photo he took at a private 2007 Amy Winehouse concert booked by former Universal managing director Valery Zeiton.
Matthew Avignone
How do they compare with U.S. royalties under the new Copyright Royalty Board settlement?
They have reached 15.1%, and it will rise. We already had 15% when Apple Music released its service in 2015. And it’s not just the rate — it’s the minimum per subscriber. Ours is higher since it’s independent of discounts. When you see our effective net rate, it’s above 15%. I’m sure it’s easier for us than for a small Eastern European society: It’s the strength of your repertoire, and it’s unbelievable the repertoire we represent.
What’s your reaction to claims that streaming payouts are less fair for songwriters and publishers than recorded-music rights holders?
The highest tariff we had on CDs was 9% of the gross price. Then iTunes forced the community to agree on 8% on each download. Now we’re above 15%. Digital has become our biggest source of revenue. I think the main issue is that [the revenue is] going to very few people. There are people, especially in urban music, who are very happy.
CMOs are coming under pressure from some of the big publishers and platforms, both of which would rather strike direct deals than go through organizations like SACEM.
To go direct with one publisher? What does that mean? We represent [the publisher-led mechanical rights organization] IMPEL, [Canadian rights organization] SOCAN, Artisjus, ASCAP and Universal Music Publishing [among others], so we mutualize our cost [of operations] and we decreased our commission on digital for our members to 9%. That’s what I’m most proud of in the last [few] years. I want to use technology to process more at a lower cost. I think it’s the wrong way to think to go direct: It’s one thing for the majors, but what about the others?
You got the top job at SACEM in an interesting way. The tradition at CMOs is that the chief executive retires with a gold watch, but you basically replaced Jean-Noël Tronc as CEO in 2021.
Jean-Noël had been here for 10 years, and I was about to quit because — honestly, I had a job opportunity, OK? So I left SACEM, and Jean-Noël and the board had a discussion, and they decided to stop their relationship. The board asked me to take the interim job, but I already had this new job. And the team here said, “Are you kidding? You’re not going anywhere!” So I went back to the board and said, “I’m interested if you agree with my plan [for] SACEM 3.0,” and they did.
For a long time, there were no women running CMOs. Now there are many: Beth Matthews at ASCAP, Andrea Martin at PRS, Jennifer Brown at SOCAN and Cristina Perpiñá-Robert at SGAE. What took so long?
There was a lot of ego. It was a small circle of people: “We are so smart, ho ho ho! Let’s have lunch and a cigar.” CEOs then were more focused on an institutional view, and now we’re more focused on day-to-day matters and how to reduce costs. Women know how to reduce costs.
What’s your favorite song?
There are so many, it depends on the mood. The songs of the moment…
That’s cheating.
Serge Gainsbourg’s “Initials B.B.,” for sure. Songs by David Bowie, “Goodbye Yellow Brick Road” by Elton John, The Beatles, “Live and Let Die” from Wings. When you want to feel better, listen to “Sunny” by [German disco act] Boney M. Or Queen of the Night [the aria in “The Magic Flute”] from Mozart.
Rap-Veber says she discovered this photo of Jane Birkin and Serge Gainsbourg, which was taken for their 1969 joint album, when she was looking for ways to monetize Universal Music Group’s archives. “It had never been exploited before I found it,” she says.
Matthew Avignone
SACEM operates in a very different legal environment from the United States. France has stronger copyright laws to protect creators but also regulations that require SACEM to set aside money to fund culture.
It’s part of our DNA because that’s what a “collective” is. With SACEM, you have the highest rates in the world: concerts, more than 8%; broadcasters, more than 3%. If we take tiny amounts [for cultural funding], you will still get paid more than from any other CMO.
Some Americans hate this idea on principle.
Many of these cultural funds come from private copy levies that don’t exist in the Anglo-American system. By law in France, and this is typically French, 25% of this revenue must be allocated to cultural action. So we pay out the 75% that no one else in the world pays, except GEMA. The publishers benefit from it, too, because it helps them develop new creators.
According to EU regulations, I am required to ask you about artificial intelligence.
Last year, it was the metaverse, but this will last much longer. We see opportunities and dangers. Opportunities: As a tool, it can help musicians create music. The main issue for us is how we know whether or not our works have been used in a new product [and] how we can get paid. It’s a worldwide discussion, but I think Europe — and I hope France — will be at the center of it. We already have 120,000 songs uploaded a day, and 60% of the 100 million tracks on Spotify have less than 100 streams a year. Why do the platforms take all of this nothing music?
A lot of songwriting talent in Africa is turning to SACEM or other European societies to license their online rights internationally. How are you handling that?
African creators are usually with their local societies for their home countries, but many are SACEM members for the rest of the world. One problem is that many of these societies in Africa are controlled by the government. The only thing I can do is partner with them to help them improve their systems. In Senegal and Côte d’Ivoire, we just entered worldwide digital agreements so we can represent their repertoire for the world. We’re working with Morocco, too, and PRS is doing partnerships in some English-speaking countries. The idea is to be a bridge between the continents. I don’t wantto be seen as a colonialist — I want to be a partner.
Two years after the pandemic and its temporary shutdown of concerts and many stores and restaurants devastated the collective management organizations that license public performance royalties for songwriters and publishers, some of those CMOs are reporting record-setting financial results. In April, German society GEMA and the United Kingdom’s PRS both collected and distributed their highest amounts ever. And on June 21, French collective management society SACEM announced that it had collected €1.41 billion ($1.54 billion) in 2022, 34% more than in 2021, and distributed €1.06 billion ($1.15 billion) — a 19% increase over the previous year. Both numbers represent new highs — both for SACEM and at least for European societies.
“Thanks to the resumption of concerts, the explosion of digital, the new agreements signed with the many users of SACEM’s repertoire, and the strategic shift undertaken in its transformation plan, SACEM had a record year in terms of both collections and royalties distributed,” said CEO Céclile Rap-Veber in the organization’s announcement. “These results demonstrate, once again, our ability to adapt and strengthen our expertise in a highly competitive and rapidly changing sector.”
For SACEM, as for all CMOs, some of the increase in revenue and distributions comes from the return of live concerts, which are a significant source of royalty revenue. But the success also reflects the growth of streaming, as well as the ability of CMOs to negotiate better prices for the compositions they license. It’s also important to note that SACEM’s results will not just affect French composers and publishers: CMOs now compete to represent the rightsholders for online use in most countries, excluding the U.S., and SACEM licenses the work of composers around the world, as well as the repertoire of Universal Music Publishing Group
SACEM, the oldest music collecting society, is setting the pace for its rivals. Its collections of €1.41 billion ($1.54 billion) are higher than those of GEMA, which in 2022 took in 1.18 billion euros ($1.25 billion), and PRS, which had revenue of 836.2 million pounds ($1.04 billion).
Direct comparisons are inexact, however, since all of the CMOs use different accounting procedures. (The two biggest U.S. CMOs, ASCAP and BMI, are also constrained in their negotiations by antitrust consent decrees.) SACEM, for example, counts money it collected and distributed in 2022, but since it takes some time to distribute funds, the money it pays out trails slightly. This implies that distributions will rise in the first part of next year. “In 2023, taking into account collections in the second half of 2022 and the first half of 2023, we expect to reach a new distribution record,” SACEM said in its announcement.
SACEM also lowered its expenses. Its ratio of operating expenses to collections was a low of 11.65%, down 3.15 points from 2021. As competition among CMOs heats up — especially between SACEM and the ICE hub run by GEMA, PRS and the Swedish society STIM — all of the societies are trying to cut costs.
In 2022, for the second year in a row, online was the biggest source of royalties — up 38% to €493 million ($538.27 million). The second largest category of revenue was television and radio, which accounted for €353.1 million ($385.56 million), up 19%. General royalties contributed €327 million ($357.06) — up 93% partly due to the return of the live music business.
The financial results only include SACEM’s core operations of collecting public performance and mechanical royalties for composers and music publishers, both in France and for online uses in most countries around the world. They do not include SACEM’s neighboring rights revenue from television and radio play of sound recordings, or the subsidiaries like the one it operates to license the neighboring rights of newspapers and periodicals when their works are used by online companies like Google and Facebook.
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