17,909

Number of UBC members

R$1.22Billions

Total royalties collected in Brazil from public
performance of musical works and recordings

R$491.65Millions

UBC’s total collections

R$384.02Millions

UBC’s total distribution

2014 was characterized by the extraordinary collection result from collective management of music rights in Brazil. For two years in a row, almost R$ 1.2 billion were collected, as a result of contracts with major users, which settled long-running legal disputes, especially concerning Open and Pay TV. In 2013, we closed a key contract with TV Globo, a leading company from one of the largest media groups in Latin America. Part of the payment for the contract with TV Globo in 2013 was made in 2014, ensuring a result even higher than in 2013. In addition, the contract with TV Globo paved the way for contracts to settle long-running legal disputes with Pay TV operators, especially NET and SKY, two of the largest groups operating in the Pay TV business, each with a very significant subscriber base and great potential for growth.

To ensure that the above contracts would materialise, it was necessary to be flexible with certain collection principles and rules applied to date even as key elements in the major legal disputes we have faced in the last few years. Through dialogue with users, we achieved success and embarked on a new phase in collective management in Brazil: debt collection ceased to require engaging in so many legal disputes. We entered a new phase improving and enhancing our relations with major users, going after a better understanding of the business models of each one, in order to obtain the best possible results for authors and publishers that have entrusted UBC for the collective management of their rights.

Although the Law 12.853/13, which amends the provisions referred to collective management that are part of Author’s Rights Law 9.610/98, has been in force since December 2013, it is still pending an implementing decree and is subject to the judgement and decision of the Constitutional Court.

The two aforementioned points do raise uncertainties, however not yet reflected in the figures and statistics. As we are to show in this report, income from public performance rights attained a record R$ 1.22 billion, representing an increase of 2.4% over 2013.

The new licensing agreements signed with SKY, NET and Claro TV during the year, plus retroactive compensation arising from agreements and other contracts signed with radio broadcasters in 2013, were the main factors which contributed to this record amount.

These contracts led to a positive paradigm shift in terms of source of income of UBC's public performance rights distribution, as 79% of the income came from broadcasters while historically, one of the most significant revenue streams has been “general users”.

The amount of royalties collected by UBC abroad remains quite discrete, despite a 14% increase over 2013, reaching R$ 2.87 million.

EMPLOYEES

At the end of 2014, UBC had 91 permanent employees and 8 trainees, making for a 1% increase over 2013, 45% men, 55% women.

MEMBERS

In 2014, 2,082 new members joined UBC, for a total membership of 17,909 at the end of the year, i.e., an 11.8% increase over the end of 2013.

They include 5.6% legal entities and 94.4% private individuals, 90.3% of whom are men.

A total of 59% of members received royalty payments in 2014.

NATIONAL COLLECTION (PUBLIC PERFORMANCE)

Income from public performance rights of music in Brazil is calculated according to the Central Office for Collection and Distribution (ECAD), which again posted record collections in 2014, for a total of R$ 1.22 billion.

This amount represents a 2.4% increase over income in 2013: R$ 1.19 billion. As in the previous year, this figure was directly impacted by licensing agreements and contracts signed with Pay TV groups. In 2014, contracts were signed with the SKY, NET and Claro TV groups.

Broadcasters (Radio, Open TV and Signature TV) accounted for 68.82% of total income across the national territory.

UBC'S NATIONAL COLLECTION - PUBLIC PERFORMANCE

Of the total collections across the national territory from public performance of musical works and recordings (R$ 1.22 billion), 40% came from affiliates or UBC members or rights holders, i.e. R$ 488.3 million.

UBC'S NATIONAL COLLECTION - MECHANICAL AND DIGITAL

Across the national territory, UBC, through its licensing department, collected a total of R$ 502.9 thousand from users such as Apple, iMúsica, Globo, Sony and Universal, among others.

INTERNATIONAL COLLECTIONS

The amounts received by UBC from abroad in 2014 saw a 14% increase over 2013. Of the total of R$ 2.87 million received from abroad, 94% (R$ 2.7 million) came from public performance rights for musical works, 5% (R$ 133.8) from public performance of recordings (neighbouring rights) and 1% (R$ 24.7 thousand) from mechanical or digital rights from abroad for members in this category.

Europe was responsible for the most significant amounts collected outside Brasil for UBC's repertoire, accounting for 65.4% of the total amount transferred to UBC from sister societies. France, Italy and UK were the top payees.

UBC TOTAL COLLECTIONS

UBC collected the sum of R$ 491.6 million in 2014. 99.3% of the total (R$ 488.3 million) is referred to performing rights of musical works and recordings within the national territory, 0.58% (R$ 2.8 million) from public performance of works and recordings abroad, 0.10% (R$ 502.8 thousand) from national mechanical and digital rights and 0.01% (R$ 24.7 thousand) from mechanical and digital rights abroad.

DISTRIBUTION OF PUBLIC PERFORMANCE RIGHTS WITHIN THE NATIONAL TERRITORY

The royalties collected by UBC for public performance of musical works within the national territory reached a record R$ 381.1 million in 2014.

This figure includes money collected from Pay TV channels retransmitted from abroad. Amounts referred to retransmitted channels are transferred as lumpsums to the society of the territory of the original transmission to be distributed by those societies. The following analysis and graphs take into consideration only the amounts actually distributed and paid out by UBC, excluding “cable retransmission” (retransmitted channels) for the reasons above explained.

Accordingly, total local collections reached the R$ 346.2 million, it benefited 89,334 national and foreign members, and represented a 7% increase over 2013.

Distribution for authors and publishers (authors’ rights share) accounted for 84% of this total, the remaining 16% going to musicians, featured artists and record producers (neighboring rights share).

Looking into the nationalities of rights holders UBC paid during 2014, 59% were UBC members and 41% members of foreign sister societies.

The most significant broadcasting category was Open TV, accounting for 40.2% of the total, followed by Radio and Pay TV, which accounted for 18.7% and 18.4% respectively. This means that 77.3% of royalties distributed to rights holders came from broadcasters. If we include cable retransmission, this percentage increases to 79%.

Then, after broadcasters, the most significant source of income was live concerts, accounting for 12.53% of the total distributed. The revenue stream identified as “other”, which covers recorded music performed in different venues (general users) now accounts for 8.46% of total distribution. The decrease in the share of general users in the overall distribution reveals a major paradigm shift. As historically we’ve been fighting in Court with broadcasters and other big users to collect fair money for public performance rights, general users have been contributing with a significant share of the distribution.

In 2009, for example, the amount payable generated from general users accounted for 31% of the amount distributed, i.e. approximately R$ 24.7 million, against R$ 29 million in 2014. However, because of the increase in income from other users, relative participation on general users in the total amount distributed fell sharply.

DISTRIBUTION OF PUBLIC PERFORMANCE RIGHTS FROM ABROAD

All amounts received from abroad were distributed in 2014, totaling R$ 2.45 million, while 95.8% (R$ 2.35 million) were distributed to members for authors’ rights and 4.2% (R$ 102.5 thousand) for neighboring rights.

DISTRIBUTION OF MECHANICAL AND DIGITAL RIGHTS

In 2014, a total of R$ 461.97 thousand was distributed for mechanical and digital rights to members affiliated in this category and for foreign repertoire represented by UBC in Brazil. Of this total, 50.7% (R$ 234.04 thousand) were distributed to UBC members and 49.3% (R$ 227.93 thousand) sent abroad for rights holders represented by UBC in Brazil.

TOTAL UBC DISTRIBUTION

The total amount distributed by UBC in 2014 was R$ 384.02 million: 99.35% (R$ 381.1 million) from public performance of works and recordings across the national territory, 0.53% (R$ 2.45 million) from performances abroad, 0.12% (R$ 442.8 thousand) from mechanical and digital royalties paid in Brazil and 0.01% (R$ 19.2 thousand) from mechanical rights.

The independent auditor Audilink & Cia. Auditores examined UBC's financial statements and issued the following opinion:

Notwithstanding the effect of the matter mentioned in the first paragraph, our opinion of the financial statements comes with a guarantee; the aforementioned financial statements appropriately reflect, in every relevant aspect, the position with regard to the assets and finances of THE BRAZILIAN UNION OF COMPOSERS, on 31st December 2014, the result of its operations and its cash flow for the year ending on that date, in accordance with the accounting practices used in Brazil.

Accordingly, we are issuing an opinion with a guarantee concerning the financial statements:

In the course of the year 2014, the society made several payments abroad, totaling R$ 229 thousand, which are posted under the heading "Investments". Regarding transactions, we were only provided with end-of-year statements consistent with the description of the nature of the business: payments made would be used to fund other technical and professional services, and this would be acknowledged in the year's income statement. Such a procedure had a positive effect on the year's surplus, amounting to R$ 151 thousand, net of tax, with the consequent effect on liquid assets.”

The value mentioned in the auditors' report refers to the investment made in the Global Repertoire Database (GRD) project, which is currently suspended.

THE ANNUAL REPORT IS A YEARLY PUBLICATION
OF THE BRAZILIAN UNION OF COMPOSERS.

BOARD OF DIRECTORS Fernando Brant (presidente) | Abel Silva
Aloysio Reis | Geraldo Vianna | Manoel
Nenzinho Pinto | Ronaldo Bastos | Sandra de Sá

EXECUTIVE DIRECTOR Marisa Gandelman

TEXTS AND EDITORIAL COORDINATION Elisa Eisenlohr

DESIGN AND PAGINATION Di-vida Design