CM In Depth

What Is The Value Of Music? Re:Sound Is Letting Businesses Know

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By Michael Raine

This article originally appeared in the September/October 2015 issue of Canadian Musician

Music may be the most ubiquitous art form in our modern world. At the mall, in the waiting room, at the gym, in the fast food joint, and on the sidewalk, music is in the background. You may linger a little longer in the store to hear the end of the song, or the endless loop of canned jazz instrumentals may make you look forward to the dentist’s needle, but it’s all there for a reason. Music affects consumer behaviour, which means music adds value to businesses. In turn, those businesses have a legal and moral obligation to pay for the public performance of that music. That is the basic message Re:Sound is trying to spread with its Music Has Value report, website, and campaign.

The basic premise of Music Has Value – that music affects consumer behaviour and therefore adds value to commercial businesses – isn’t new. There is an oft-referenced study in a 1999 issue of the Journal of Applied Psychology whereby researchers played French and German music from a supermarket wine display on alternating days, the result being that French wines outsold German wines on days when French music was playing and vice versa. When asked, consumers didn’t think the music had affected their purchase. Combine that subconscious behavioural influence with a BBC study that found urbanites hear an average of 76 minutes of “unchosen” music every day and the commercial impact of publically-played music could be quite significant, to say the least.

ReportWhile there is a wealth of such research available, and much of it is now easily accessible at MusicHasValue.ca, the folks at Re:Sound felt it valuable to have Canada-specific evidence that they can present to consumers, politicians, and, most importantly, the many thousands of business owners across the country who are still not licenced to play the music they use. Those businesses require two separate licences: one from Re:Sound, which collects and distributes royalties for artists and record labels, and another from SOCAN, which does so for songwriters and music publishers.

Re:Sound, with funding from the Ontario Music Fund through the Ontario Media Development Corporation (OMDC), commissioned polling, research, and strategic marketing firm Leger to conduct a survey of 1,500 consumers in the spring of 2015. Some of the key findings of the Music Has Value survey were:

– 87 per cent agree that they would prefer to patronize businesses that support musicians by using music legally and ethically

– 87 per cent agree that musicians should be paid for their work, just like everyone else

– 7/10 agree that music adds to the experience of shopping at a store

– 3/4 believe that the music businesses play impacts their brand

– 59 per cent agree that music adds to their experience at work

– 4/5 feel that music in a bar, restaurant, or nightclub enhances their experience

– 2/3 say that gyms, fitness classes, spas, and hair salons benefit from music being played

[![Re:Sound President Ian MacKay](/contents/images/2016/05/Ian-MacKay-240x300.jpg)](/contents/images/2016/05/Ian-MacKay.jpg)Re:Sound President Ian MacKay
 

“We decided [the survey] was very worthwhile and had wanted to do this for a couple of years now,” says Re:Sound President Ian MacKay. “In terms of the licencing side, we are in charge of licencing businesses that play music, and we want to be as successful at that as possible and get as many business licences as possible. We’ve already licenced 97,000 businesses across

the country, but there are many that we still have to licence and we want to reach out to them in a positive way by helping them see the plusses that music brings to their business, how it enhances their brand, how it can really help in terms of driving consumer spending and behaviour, while at the same time reinforcing the message that it is a legal obligation to pay for the blanket licence for music.”

While songwriters have been collecting public performance royalties for decades (via the SOCAN-issued licence), it’s only been since 1997 that businesses needed to pay for the public use of a sound recording (Re:Sound-issued licence), so raising this awareness among business owners, employees, and the general public has taken time. “I think it is a lot better known now, but there is always more work to do,” says MacKay. “That takes us back to the Music Has Value research as well, which is finding ways to get the message out there that isn’t just, ‘If you’re playing music, it needs to be licenced because it’s a legal requirement,’ but getting it out there with some value-added content for businesses in terms of, ‘Here are some interesting studies on what your own customers are saying and here is some international research.’”

Part of this initiative involves Re:Sound sending 5,000 copies of the Music Has Value report and background information to unlicensed businesses in Ontario, as well as to MPs in the province.

So while spreading awareness among the business and political worlds is the main goal, also important in the big picture is arming musicians and others in the music industry with the facts they need to address common questions and complaints. “From time to time, Re:Sound or SOCAN will be in the news and a business will be complaining about, ‘Why do I have to pay for music?’ Well, part of the reason for having this *Music Has Value *research is to arm all the music creators out there and all the people in the music industry so that when they see articles like that, or when they’re being asked to comment on articles like that, they’ve actually now got some stats and data to back up their viewpoints.”

But how valuable is the paid use of music to musicians? First, the blanket licences, which grant a business permission to play an unlimited amount of music, are calculated differently depending on the industry. Licence fees for restaurants, for instance, depend on the capacity of the restaurant and how many days per year it’s open, whereas for retail stores, it’s calculated based on square footage. Those fees collected by Re:Sound are split evenly between musicians and record labels. Of that 50 per cent that goes to artists, it is further divided 80/20, with the larger portion going to feature performers (i.e. named solo artist or permanent band members) and the smaller portion going to background performers (i.e. session musicians).

Of course, musicians need to be registered with Re:Sound to collect this revenue. In 2013, Re:Sound collected over $38 million and as a not-for-profit, all the revenues (less the costs of running the organization) are distributed to rights holders. Re:Sound’s current operating costs are approximately 14 per cent.

What this adds up to for individual musicians could be a lot or a little depending on how many plays they’ve received. “From a lot of the businesses that we licence, we get full logs. So, from commercial radio, CBC, satellite radio, pay audio, and music streaming services, we get full logs of every track that they play – 24 hours a day, 365 days a year. In 2014, the grand total of plays Re:Sound processed was 138 million. We distribute those monies based on going through all those logs and really doing it on a track-by-track, station-by-station basis. For businesses like retailers, restaurants, gyms, etc., at this stage, I don’t think any of them would have the technology to track the music that they’re playing and so what we do currently is we distribute those monies based on the proxy from all the other logs that we receive. So, we’ll take the commercial radio logs and distribute the money from retail on the same basis on the sort of general premise that that is a pretty good proxy to follow. The more popular something is on radio, it is probably more likely that it is going to be played at The Gap or in a restaurant or gym,” explains MacKay.

Obviously, in an ideal world, they would be able to track every song played in licenced businesses, and MacKay believes that technology will come in time, but he adds, “The other thing is remembering that we’re a not-for-profit, so the aim of our organization is to bring in the money as cost effectively as possible and get it out the door as efficiently and cost effectively as possible.”

For now, of course, MacKay and company are focused on getting the word out and backing it up with the Music Has Value research. In particular, MacKay points to the survey finding that about 50 per cent of respondents “would take some kind of action if they discovered that a business they patronize did not license the music it uses, including speaking to the owner, not recommending the establishment to others, and being less inclined to shop there.”

“That’s something that we’ll want to build on with the Music Has Value findings, and we’re going to add to them over time,” says MacKay. “I think that’s an important one for musicians and people in the music industry to hear to encourage them to get that message across to businesses that they patronize and say, ‘You know your customers care about this stuff.’ It’s why campaigns like SOCAN’s Licence to Play are a great thing, because for businesses to put up that sticker shows that they’re doing the right thing, legally and ethically.”

Mentioning SOCAN, MacKay says that they’re already collaborating and that there is potential for the two organizations to work together on a joint initiative, as has been done in the U.K. and the Netherlands with their respective collection agencies. “We’re doing a lot of the same work,” MacKay says about Re:Sound and SOCAN, “just representing different parts of music creation.”

So does music add value to businesses? Obviously. But now, with Music Has Value, the goal is to bring all parties together and end any claims of ignorance.

END

*Michael Raine is the Assistant Editor of *Canadian Musician.