CDs & Recordings
Consumers are more engaged with music than ever before. At the same time, they are less willing to pay for the music they love. In an extended format transition, for example, consumers have migrated from owning music either as physical CDs or digital downloads to the access model of subscription streaming, driving down music spending in the process.
Total U.S. retail sales of music were $6.97 billion in 2014, a hair less than the prior year, according to the Recording Industry Association of America (RIAA). Several survey respondents mentioned streaming, and the idea that consumers prefer to pay to simply access content, rather than own it, as one of the media trends that impacted licensing in 2014.
Concerts & Live Events
On the concert front, the proliferation of pricy multi-day music festivals has had the effect of driving up ticket prices and decreasing the number of tickets sold. The overall result is that in 2014 the music industry put fewer of the proverbial “butts in the seats.” According to Pollstar, the Top 100 North American Tours of 2014 grossed a combined $2.73 billion, down 2.2% from 2013. Tickets sold totaled $38.2 million, a drop of 4.7%. Meanwhile, the average ticket price jumped $1.92, or 2.8%, to a record high $71.44.
Artists & Groups
Popularity of musical acts is always cyclical. And 2014 saw the retail products business of some top acts fall off without an accompanying rise in the sales of new artists to make up for the losses, pundits said.
One Direction and Justin Timberlake are the poster boys for the trend, one licensing agent said, using Pollstar’s No. 1 and No. 4 North American touring acts of 2014, respectively, as an example of artists that sold “huge [amounts of] merchandise at shows, but virtually nothing at retail.” On-site sales represent a relatively small percentage of licensed music product sales, sources said.
Although new acts will eventually take their place as they always do, rising stars such as 5 Seconds of Summer, Fifth Harmony and Ariana Grande were not yet positioned to fill the void in 2014. This year, however, may be a different story. Grande, for example, has her first fragrance coming to retail in September.
Product Categories
Despite the 2014 drop in licensed merchandise sales, music is still an evergreen property type, one that has grown every year since 2009 (including growth of 3.1% in 2013.) “Classic rock remains remarkably steady,” said one licensing agent, with no abatement in sales of the genre’s staple product—T-shirts.
There’s also growth in food and beverage products based on licensed properties. Craft beers, coffee and spirits in particular are growing categories for rock music licensing, the agent said. Examples include Aerosmith drummer Joey Kramer’s Rockin’ and Roastin’ coffee line and Grateful Dead-licensed American Beauty pale ale.
Classic rocker Jimmy Buffett is the epitome of a musician who has been able to create a lifestyle brand, with his Margaritaville and Cheeseburger in Paradise brands stamped on restaurants, apparel, footwear and food and beverage items. The trend of musician as lifestyle brand is a perennially strong and far reaching one, ranging from Buffett and Sammy Hagar, who also cultivates a laidback attitude with the Cabo Wabo and Sammy’s Beach Bar brands, to more fashion-oriented artists such as Gwen Stefani (Harajuku Lovers and other brands) and Timberlake (William Rast fashion, Sauza 901 tequila).
Pop diva Taylor Swift is currently exploring how far the trend can be extended by attempting to trademark dozens of short phrases from her songs, such as “this sick beat” from her hit “Shake It Off,” in what observers predict may be a massive licensing play.
Royalties
As with most property types, royalty rates for music licensed merchandise held steady in 2014. According to the TLL Survey, the average royalty in the U.S. and Canada was 8.28%, up 0.2% from 8.26% in 2013. Royalty amounts ranged from 4% to 20%.