Music Industry Sees Nightclubs as a New Source of Revenue

In Australia, every nightclub-goer is now a lucrative V.I.P. — to the music industry, at least.

To pump music out to their dance floors, Australian clubs used to have to pay record companies and artists a nominal 7 Australian cents in royalties per guest, per night. Under a recent copyright settlement, that rate has risen to 50 cents per customer, and it is set to jump to 1.05 dollars, or 84 U.S. cents, in a few years.

“We looked at this and thought, 7 cents just doesn’t seem right, when people are paying 10 to 15 dollars to get in and at least 5 dollars for a drink,” said Stephen Peach, chief executive of Phonographic Performance Co. of Australia, which collects the fees. “Without music, there wouldn’t be a nightclub.”

As the music industry searches for a way to make up for plunging sales of compact discs, it is pushing to generate new revenue, not just from Australian clubs but also from Italian restaurants, Chinese karaoke bars and U.S. radio stations, as well as fitness centers, retail stores and myriad other businesses that play music, around the world.

“This has always been seen in the past as a secondary source of revenue,” said John Kennedy, chief executive of the International Federation of the Phonographic Industry, a London-based trade group for the major record labels. “But with the declines in revenue from physical sales in recent years, it has become more and more important.”

Royalty payments to the record industry from so-called performance rights rose 16 percent last year, according to the federation, even as overall music sales fell by 8 percent. The federation is coordinating a global campaign to double the amount raised from performance rights over the next decade.

To reach that goal, it is urging other countries to follow the Australian example and increase the rates paid to…

continue reading from The New York Times by ERIC PFANNER

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