COVID-19 impact on November APRA royalty payment

COVID-19 has impacted our revenue, and royalty payments

November 2020 APRA royalty payment overall will be down 11% compared to the same quarter last year.

We’ll keep you updated on significant impacts to future APRA royalty payments.

COVID-19 and the current recession have impacted our revenue, most specifically affecting the November APRA Australia royalty payment. This payment relates to revenue from the April-June quarter. Revenue from concerts, live music, radio and television, cinema, airlines and hospitality was hit dramatically in this quarter. Digital continued to grow, which helped shield the impact, but the November APRA royalty payment overall will be down 11% compared to the same quarter last year.

The pandemic has also impacted our expenses. While APRA let go almost 20% of its staff in the quarter (salaries are the largest part of our expenses), the positive impact this will have on our expenses will not be felt until future royalty distributions.

APRA makes quarterly royalty distributions each year from its domestic licence fees. Broadly speaking, each distribution occurs four-and-a-half months after the end of the relevant calendar quarter. For example, revenue from the April-June quarter is paid to members in mid-November.

Impact on the main Australian domestic royalty distribution pools for the April-June 2020 quarter:

Digital (incl Spotify, YouTube, Facebook and Netflix, etc): Net distributable revenue (NDR) – ie: royalties - increased 27% compared to the same quarter last year. Digital makes up just over 50% of the total June quarter royalty distribution. Royalties increased in part because of increases in subscribers to those services (or increases in their advertising revenue where relevant).

Commercial TV (e.g. Network Seven, Nine and Ten): Royalties decreased by 20% compared to the same quarter last year as a result of three key factors:

• a recently revised commercial TV licence scheme, and a reduction in TV advertising revenue, which has resulted in overall lower licence fees from the TV sector;
• and a large reduction in background music revenue (To make our royalty distributions to members and affiliates, licence fees from background music in retail, hotels, fitness etc are in part added to other distribution pools such as commercial TV. Many businesses were closed during the quarter, reducing our revenue from background music as a result).

Subscription TV (inc Foxtel and Fetch): Royalty distributions from this sector are largely unchanged compared to same quarter last year due to the structure of the main licence scheme.

Commercial Radio (e.g. KIIS, nova and smooth fm): 57% decline in royalties compared to same quarter last year due to two key factors:

• APRA’s licence scheme with this sector is linked to advertising revenue. Even prior to the pandemic that revenue had been contracting but COVID added significantly to the contraction across the commercial radio industry; and
• and a large reduction in background music revenue (see above), impacting the licence fees added to this pool.

Concerts/Events: A 24% decline in concert royalty payments compared to the same period last year. APRA invoices concerts/events after box office figures are known. As no concerts occurred in April – June 2020 due to COVID restrictions, the distribution was only made up of revenue from events that occurred in the prior quarter.

General Live Performances: APRA has distributed royalties from this pool to members on an annual basis. This normally occurs in November but in response to the pandemic, APRA brought forward Performance Reports payments of $6.7m to May 2020.

Cinema and Nightclubs: Compared the same quarter last year, our royalty distribution from cinema reduced by 76% and nightclubs by 82%, as most cinemas and nightclubs were closed during the quarter.

We’ll keep you updated on significant impacts to future APRA royalty payments. A reminder: We strongly encourage you to apply for Support Act Crisis Relief Fund if you need financial assistance for living expenses. Read our tips for applying for crisis relief.