The concept of "recorded music" refers to the different sectors of the music industry: phonographic production and distribution, sale of records or music online, as well as music publishing. Within the Ministry of Culture, the Directorate-General for Media and Cultural Industries (DGMIC) is responsible for designing and evaluating the support and regulatory mechanisms necessary for a balanced development of this economic sector.
B. Mutations due to the disk crisis and the digital transition, market figures and consequences of the Covid-19 pandemic
- Remuneration of creators and sharing of value
- Exhibition of music in the media
- Respect for copyright and related rights
1. Economic model and sector structuring
The economic model of recorded music is based on methods of direct remuneration based on the rental, sale or listening of phonograms (physical or digital) and corresponding to the exclusive right to authorize, and indirect, corresponding to legal licensing schemes (equitable remuneration, remuneration for private copying) and other related rights.
The sector is composed of major players, subsidiaries of multinationals (3 majors), and a dense and varied network of independent SMEs and SMEs. All of them form, alongside publishers, show producers, managers, broadcasters and distributors, an ecosystem around creators (authors, composers) and performers.
In 2019, the total number of record companies and labels was estimated at 1,375, with 70% of the market share of phonographic production being held by majors1. The sound recording publishing sector (code naf 59.20Z) had 9,300 employees in 2016 (34% women, 56% under 40 and 78% living in Île-de-France). The retail sale of music and video recordings in specialized stores (code naf 47.63Z) included, without distinction, just under 500 establishments in 20182.
2. Mutations due to the disk crisis and digital transition, market figures and consequences of the Covid-19 pandemic
In the early 2000s, the recorded music sector experienced a major crisis leading to the destruction of nearly 60% of its added value over the period 2002-2015. This crisis, partly due to the development of illicit uses and reinforced by an initial difficulty of the actors of the sector to adapt to the digital, has had, beyond its social repercussions, an important impact in cultural terms, in particular for musical diversity, the renewal of talent and the maintenance of a plurality of actors (concentration, disappearance of SMEs and TPE). In addition, this situation has exacerbated market access difficulties, whether in the media (radio and television broadcasts) or in distribution conditions (physical and digital markets).
To cope with the crisis, many players have been forced to develop a “360° strategy”, that is to say a diversification of their resources by going out themselves, without resorting to subcontracting or licensing, income based on the different holdings of the records. In this case, the development chain is concentrated in a single operator, either through the integration of dedicated staff, through the acquisition of companies or, finally, through the internal development of ad hoc structures.
Since 2016, the sector has experienced fragile growth, based in part on the growth of digital sales, particularly through streaming. Recorded music revenue, which had fallen by 60% in 15 years, is now growing at a moderate pace (+3.9% in 2017, +1.8% in 2018, +5.4% in 2019).
This trend was confirmed in 2020, with revenues that managed to stagnate (+0.1%) despite the health crisis, reaching €781 million, then benefiting from a strong rebound in 2021 with an increase of 14.3% (€861 million).
Streaming confirms its driving role in the growth of the market, with revenues representing nearly 70% of all sales. Paid streaming supports this growth: paid subscriptions account for 77% of streaming revenues, while ad-supported streaming accounts for only 11% of revenues in 2021. Although the revenues generated by physical media are falling steadily, they still represent 30% of sales. Vinyl is growing particularly (+10%) and continues to appeal to a growing segment of consumers. It now accounts for nearly 35% of the physical market, with sales tripling in five years.
Restrictive measures taken to fight the Covid-19 epidemic have led to the closure of some of the 4,000 record outlets, cancellations of concerts and festivals, which have limited the promotion and sale of music. However, the main negative effects of the crisis concerned revenues from the collection of synchronization rights (music to the image, films, series, commercials, etc.) and revenues from neighbouring rights. (impact of closing sound stores and public places, combined with declining advertising revenues from traditional media3) . The structural increase in streaming made it possible to compensate for the cyclical decline in other market segments more impacted by the health crisis. However, it benefits quite unequally the players in the sector, some of whom remain extremely dependent on physical sales.
1. IRMA, “Music Trades Barometer,” September 2019.2. LIFO, Key Figures, Culture Statistics, 2019.3. Snep, Recorded Music Market, 2020.
Accompaniment and structuring of the recorded music sector
The Ministry’s policy of supporting the music sector is the responsibility of the Artistic Creation Branch (BOD) for live music, and the Media and Cultural Industries Branch (CMIB) for recorded music, that is to say the different sectors of the phonographic industry: phonographic production and distribution, sale of records or music online, as well as music publishing. The two Directorates-General are also working together to ensure a coherent follow-up of this hybrid sector, which is responsible for both artistic creation and cultural industries.
With regard to the music industry, the Directorate-General for Media and Cultural Industries (DGMIC) is responsible for designing and evaluating the support and regulation mechanisms necessary for a balanced development of this economic sector.
1. Regulating the digital transition
a. Remuneration of creators and sharing of value
In 2013, the Minister entrusted Mr. Christian PHELINE, Senior Advisor at the Court of Auditors, with an objective mission on sharing value in online music. This mission made it possible to analyze the distribution of the value generated by the online exploitation of music, both between artists and phonographic producers and between them and online music platforms, In particular, it recommended better regulation of contractual practices.
In order to improve relations between producers and online music platforms, the report also recommended that, in the absence of self-regulation, the principles set out in the charter of the “13 commitments for online music” be inserted into the act. (developed under the supervision of Mr. Emmanuel HOOG). Finally, it recommended the establishment of a specialized mediation procedure to resolve conflicts between platforms and producers or between artists and producers (which was finally created through the creation of a Music Ombudsman).
Following this report, a mediation mission led by Mr. Marc SCHWARTZ led to the signing of a memorandum of understanding «For an equitable development of online music» in October 2015 by teneight organizations representing the music industry. Through this agreement, the players in the music industry, performers and their representatives, phonogram producers and platforms have committed themselves to each other, alongside the public authorities, for a balanced development ensuring a fair distribution of the fruits of the new modes of music distribution.
Producers, in particular, have agreed on the need for a minimum remuneration guarantee for performers in return for the digital exploitation of their recordings. They also agreed on a framework for calculating the artists' remuneration base. The law of 7 July 2016 on freedom of creation, architecture and heritage (LCAP) thus introduced the principle of this guarantee of minimum remuneration for streaming broadcasts. of phonograms, which could be materialized for the scope of the national collective agreement on phonographic publishing in an agreement concluded on 12 May 2022 between the representative organizations and the collective management bodies of performers on the one hand, and the representative organisations and bodies for the collective management of phonogram producers.
The 2015 Memorandum of Understanding has also strengthened the transparency of the sector’s economy and improved the exhibition of music and cultural diversity on online music platforms, while reaffirming the government’s commitment to support the development of online legal offerings.
b. Exhibition of music in the media
The exhibition of music in the media is a subject of permanent demands for the music sector, given the essential role played by radio and audiovisual media as a guide. The mission entrusted to Mr. Jean-In 2014, Marc BORDES came up with proposals to improve the exhibition of French-language music and young talent in order to support the development and creativity of the music sector in the face of technological and competitive changes and new public expectations. This report highlights the importance of maintaining francophone music quotas.
c. Respect for copyright and related rights
The vote of Laws no. 2006-961 of 1 August 2006 on copyright and related rights in the Information Society and no. 2009-669 of 12 June 2009 promoting the dissemination and protection of creation on the internet, has enabled, in particular by creating the high authority for the dissemination of works and the protection of rights on the internet (HADOPI, now merged with the CSA within ARCOM) and the graduated response mechanism, to place respect for intellectual and artistic property rights as a fundamental and unavoidable principle.
Similarly, the French Government has mobilized strongly for the adoption of Directive 2019/790 of the European Parliament and of the Council of 17 April 2019 on copyright and related rights in the digital single market. It strengthens the ability of rights holders to be remunerated by online content sharing platforms and improves the protection of the rights of authors and performers in their relationships with the exhibitors of their works.
It thus marks a major step forward in favour of protecting creators in the digital age. As access to works is increasingly made online, this text reaffirms the importance of copyright as a historical foundation for the fair remuneration of artists and the creativity of European companies.
In particular, the transposition into French law of Articles 17 to 23 allows creators to be remunerated by sharing platforms that massively distribute their works, to obtain the application of effective preventive measures guaranteeing the unavailability of unauthorized works, while providing users with greater legal certainty and new rights. It also enshrines the principle of appropriate and proportional remuneration, while strengthening the obligations of transparency for the benefit of authors and artists.
In addition, in the face of the emergence of alleged fraudulent practices observed on online music listening services aimed at artificially modifying, in particular by means of “fake listenings” online (“streams”)In June 2021, the Minister of Culture, Roselyne BACHELOT-NARQUIN, entrusted a fact-finding mission to the National Music Centre.
The objective of this study is to establish in the consultation a diagnosis of the practice of «stream manipulation» and to study its consequences, both in terms of redistribution of income to rights holders, but also in the preservation of musical diversity.
2. Financial Assistance
a. Support for the creation
Since the vote of Law No. 85-660 of 3 July 1985 on copyright and the rights of performers, producers of phonograms and videograms and audiovisual communication companies, 25% of the rights collected in respect of private copying and 100% of the sums that could not be allocated from equitable remuneration due to lack of identification must, under Article L. 324-17 of the Intellectual Property Code, to finance actions of general interest (production, distribution of live performances and training of performers), in particular through collective management bodies.
In addition, the State wanted to encourage the creation and support of inter-professional organizations mobilizing the entire sector around common support actions such as:
- the Fonds pour la création musicale (FCM), which provided selective funding for phonographic, video and audiovisual production, the production of live performances, and support for physical and digital distribution;
- the French Music Export Bureau, which was aimed at French professionals active in export (record producers, publishers, distributors, show producers, managers, artistic agents).
The creation of the National Music Centre (CNM) by law no. 2019-1100 of 30 October 2019 aims to bring together the various tools of support to the music sector. As such, 2020 has made it possible to prepare, according to the provisions of Article 6 of the law of 30/10/2019, the integration within the CNM of the Fonds pour la création musicale (FCM) and the Bureau export de la musique française (Burex). These structures autonomously continued their actions in 2020, until their dissolution and integration into the NJC on 1 November 2020.
b. The Phonographic Production Tax Credit (CPTC)
The phonographic production tax credit was introduced in 2006 with the objectives of promoting musical diversity, preserving French-language creation and providing structural support to businesses, the most important of which are SMEs and small businesses. which are most vulnerable to changes in the sector.
This measure, which has already been the subject of several extensions (in 2014, 2017, 2019 and 2020 until 2024), has been strengthened in the context of the amending finance law for 2014 and then in the finance law for 2021.
Its rate is 20 % of the total eligible expenditure incurred by phonographic production companies for artistic projects involving new talent. It is increased to 40% for small businesses and SMEs meeting the European definitions. Development expenses eligible for the IPPC are capped at €700,000 per registration, with the total amount of tax credit refunded not exceeding €1.5 million per company per fiscal year.
As of October 1, 2020, the President of the National Music Centre, on behalf of the Minister responsible for Culture and in accordance with section 3 of the Act of October 30, 2019, is responsible for the issuance of the approvals related to this tax credit, as well as the living entertainment tax credit.
c. Music Publishing Tax Credit (METC)
The evolution of economic models attached to music has led music publishers to bear an increasing share of risk in the development of artistic projects and to play a strategic role in the development of new talent. Yet these key players in the value chain have so far been in the blind spot of public support, while other actors located downstream of the sector and whose economy relies on the exploitation of published works benefit from dedicated instruments that have proven their effectiveness (similar to the tax credit for phonographic production or the tax credit for live entertainment).
This measure, in force since January 1, 2022, aims to support music publishers for part of their expenses incurred for the financial years ended on or after December 31, 2022. Expenses eligible for the tax credit are expenses to support the creation of musical works, their control and administration, their publication, exploitation and commercial distribution as well as the development of the repertoire of their author or composer. The system targets, for contracts preferably signed from 1 January 2022, works of new talent and aims to promote the publication of works in French or a regional language in use in France.
Up to a limit of €500,000 per fiscal year and per company, the amount of the tax credit for publishing musical works is equal to 15% (30% for micro, small and medium-sized enterprises) of eligible expenses incurred until 31 December 2024.
The National Music Centre, which already manages the other two existing tax credits in the field of music and variety, will be responsible for processing applications and issuing approvals.
d. Short-term aid plans
In 2012, following the liquidation of the distributor DISCOGRAPH, the Ministry of Culture and Communication implemented an emergency plan for phonographic producers who were suffering the failure of this distributor.
From 2013, in an ever-tense context, the changes linked to the digital transition are disrupting both the modes of production, distribution and distribution of works as well as the economic balances of the music sector, the Minister of Culture and Communication wanted to implement three support mechanisms for businesses that contribute to the emergence of talent, the dynamics of creation and the irrigation of territories, and for which the aids did not exist or were not suitable:
- to very small phonographic production companies;
- to online music platforms;
- to the record stores.
These aid plans have received €700,000, which has helped some 50 companies.
In order to ensure the sustainability and better management of these temporary measures, the Ministry of Culture introduced in autumn 2016 a new aid for innovation and the digital transition, with an envelope of nearly 2 million euros. As the National Music Centre was given the power to support innovation in the music sector by law, the decree of 21 October 2016 creating this aid was repealed in April 2021, in order to allow the CNM (which now benefits from these credits) to implement a mechanism to support innovation and to extend it to the entire music sector.
In addition, in 2020, to address the crisis caused by the COVID-19 pandemic, the State allocated several exceptional allocations to the National Music Centre. Thus, after a first budget redeployment of €10 million in March, the President of the Republic announced in May the allocation of €50 million to the CNM, subscribed to €1 million of redeployment of credits by the Directorate General of Media and Cultural Industries. Following decisions by the Prime Minister and the Minister of Culture, the CNM was subsequently endowed with an additional €42 million announced at the end of August 2020 to accompany the resumption of show activities at the end of the year, and €55 million in October 2020 to support live entertainment during the implementation of the new curfew. Finally, the CNM was entrusted with an envelope of €200 million as part of the Recovery Plan introduced in the 2021 Finance Act, supplemented during the year by several dedicated envelopes (support for audiovisual recordings of shows, compensation for loss of tickets, exceptional support for festivals, etc.). On the other hand, IFCIC’s resources for cultural enterprises have been strengthened by €105 million.
e. Structural aid to enterprises (especially with SMEs and SMEs): the Institute for the Financing of Cinema and Cultural Industries (IFCIC)
49% of the private credit institution held by the public sector, the IFCIC has a mission of general interest by contributing to the development of cultural industries in France, facilitating access to bank financing for these companies through a loan guarantee scheme.
As such, IFCIC offers all companies in the Ministry of Culture’s area of expertise, a guarantee of their bank loans, from 50 to 70%, as well as a loan offer, the Cultural and Creative Industries Loan Fund (CCI), created in November 2017 from the merger of existing sector loan funds. Its purpose is to support the risk-taking of independent SMEs and small businesses and ensure their “re-banking” in the traditional banking sector.
f. Market access: aid to independent record stores
The distribution of cultural goods, including recorded music, is an essential issue for public access to works. In fact, it has a social and spatial planning dimension as well as a major economic dimension in the value chain of cultural industries.
The Club Action des Labels Indépendants Français (CALIF), association law 1901 created in 2002 at the initiative of several French labels and independent phonographic distributors and subsidized by the Ministry of Culture, Until its integration into the National Music Centre, its mission was to help create new local cultural shops (record stores and video stores) and maintain existing outlets. This approach has since been part of the preservation and development of a diversified production requiring a network of sales outlets capable of relaying a diverse and sustainable offer to the public. Henceforth, the CNM animates the support windows specifically directed towards these indispensable actors of local cultural broadcasting.