Over the last ten years, revenue generated by sync licensing has been depicted as representing a relatively steady 2 to 3 percent of total industry revenue for recorded music. Given music’s critical role in creative expression, the recent explosion in video production would suggest a similar explosion in sync licensing revenues. But finding music and clearing it for sync can be complicated, time consuming and expensive, creating hurdles to both existing uses as well as impediments for new use cases. As technology is introduced to overcome these challenges, it could unleash the full potential of this revenue stream.
The advent of the Internet is the most obvious, recent example of the dramatic impact new technology can have on industry revenues. The ensuing pivot from physical to digital music consumption in the beginning of the new millennium caused revenues from physical sales to drop by more than 50%, with – initially – only a marginal offset from digital revenue. In the last 5 years, however, digital revenue streams have grown as listeners have engaged with streaming platforms – technologically aided in no small part by widespread adoption of broadband, wi-fi and cell phones – and the industry has regained its footing.
But technology’s ability to alter the industry and ultimately pave the way for new revenue revealed itself long before the internet. In 1790, when the first copyright law was passed in the United States, performances and sales of sheet music were the primary sources of music revenue. There was no such thing as a “recording.” That changed in the late 1800’s with the invention of the phonograph and player piano. Seeking to capitalize on this new technology, publishers lobbied Congress so that they could earn revenue from sales of records and piano rolls as “mechanical” reproductions, a wish granted with the Copyright Act of 1909.
Technology again disrupted the music world in the early 1920’s, when radio broadcasting took hold. As radio stations blossomed across the country and radio sets proliferated in American households, this new industry threatened both sheet music and phonograph sales. Just as with the introduction of phonographs and player pianos, however, the arrival of broadcasting ultimately led to new revenue for the music industry. First, a 1923 Supreme Court decision confirmed that radios had to pay performance royalties on broadcasts. Then, in 1935, music was first played as filler during the radio broadcast of the 5-week trial for the Lindbergh kidnapper. When the trial was over, listeners clamored for the music show to continue, paving the way for a long-term, synergistic relationship between radio broadcasting and record sales.
Synchronization itself is the product of technological innovation. In the early 1900’s, silent films were all the rage until two new technologies were introduced: one for playing sound on film and another that enabled synchronization of music to motion picture action. The influence of these developments on the film and music industries was rapid. By 1929, all major motion picture theaters in the US had been modified for sound, signaling an end to the silent film era, and film companies had strategically begun acquiring publishing rights to music. Music and film have been creatively intertwined ever since.
Today, music is as important as ever in fulfilling the creative vision of producers of all kinds, whether they be developing content for film, TV, advertisements, video games or other media.
Today, music is as important as ever in fulfilling the creative vision of producers of all kinds, whether they be developing content for film, TV, advertisements, video games or other media. Moreover, given the relative ease with which people can now both create and distribute video and digital content, we see tremendous experimentation in combining music with other media, such as in applications like TikTok, streaming exercise videos offered by the likes of Peloton and others, the growth in film and TV production spawned by streaming video on demand, as well as in the blossoming podcast industry. While sync licensing at one time was viewed by many as beneath true artists, it can now be a major source of revenue for them. And for unknown artists, the right placement can launch a career.
Securing sync licenses, however, is a complex business. For one thing, just as making video and digital content is easier, it also has become easy to produce and distribute music. Spotify now boasts 50 million tracks. Finding the right song in the midst of such vast inventory can be an inherently needle-in-the-proverbial-haystack challenge. Once you find it, you then need to identify the rights holders, an endeavor not unlike ancestral research when tracing the copyright lineage of certain songs, and get all those rights holders to agree to the proposed use. Until recently, therefore, the sync licensing process has been weighted down by the friction that the music discovery and licensing processes introduce.
If we can make it easier—and faster—to discover and clear commercial music, this will inevitably open up a range of new possibilities for sync.
It is interesting to consider what will happen as this friction is removed. For some insight, we need only look to the production music industry, which is based on a foundation of straightforward, one-stop licensing. That industry generates an estimated $1 billion to $2 billion in revenue—a spectrum that, at the lower end, aligns to sync revenues reported by both the recorded music and music publishing industries, and at the upper end dwarfs them, demonstrating the potential for a streamlined workflow. If we can make it easier—and faster—to discover and clear commercial music, this will inevitably open up a range of new possibilities for sync. Not only will producers of more traditional media such as film, TV, and advertising benefit from the ease of access, but so will producers of new media, who typically have little to no background in the what, where and how of sync licensing.
Enabling effective music discovery and efficient licensing workflow are issues that technology is suitably poised to solve. The sync industry arose as a result of technological innovation. As we again harness technology to take it to the next step, we should expect sync licensing revenues to reach new heights.
Cestjon McFarland is co-founder and General Counsel/Head of Business Affairs at SyncFloor, a marketplace of commercial music to be used in advertisements, film, TV, video games and more, and its sister marketplace, SongsForPodcasters.