Financing of the National Music Center fractures the sector

Posted on September 27, 2022 at 17:54Updated on September 27, 2022 at 7:03 pm

The next few months will be crucial for the future of the National Music Center (CNM), although the Ministry of Culture has prudently chosen not to decide on its financing for 2023. This public establishment, claimed by the sector for years to preserve diversity musical, and created the 1Ahem January 2020, will you already have to reduce the aerodynamic profile due to lack of means? Inspired by the National Center for Cinema and the Moving Image, which involves the entire sector to defend French cinema, the CNM was launched without the professionals agreeing on its funding. If the exceptional funds poured in by the State during the Covid-19 pandemic have hidden the problem, now the differences of opinion come to light.

The CNM currently has three resources: a tax on the sale of show tickets that should contribute 30 million in 2023, compared to 35 million in 2019, given the uncertain recovery; a state budget of 26 million to cover the operating expenses of the CNM (18 million) and contribute to transversal support; and aid from collective rights management entities, initially estimated at 7 million but reduced to 1.5 million due to the health crisis and European jurisprudence as of 2020, which requires these entities to pay back 25 million annually to American rights holders to the detriment of local artistic projects.

a broad coalition

It is essentially the live performance, still permanently affected by the pandemic, that puts the pot in the CNM budget. But the latter is far from having the 80 million a year needed for its missions to support the entire sector.

Recorded music, in good condition, is a great absentee, denounces a broad coalition to demand a 1.5% tax on income from paid streaming (Spotify, Apple, Amazon, Deezer, Qobuz) and free (Facebook, TikTok , Youtube). There are production companies of shows (Prodiss), non-profit structures for contemporary music (SMA), independent labels (UPFI) among which are the heavyweights Believe, Porque, Wagram, collective management entities (Sacem, etc. ), publishers (CSDEM), classical music (Profedim, Fevis), performers… Unpublished.

logical tax

However, it is not enough to convince the majors (Universal Music, Warner, Sony) represented by the SNEP, allies of the platforms, who reject the income tax on paid streaming and propose a taxation of video streaming. The reason ? They consider that recorded music has no room for maneuver because its VAT is 20%, compared to 5.5% for live performances.

The majors add that they already finance a support circuit for their industry through collective management organizations and that the governance to distribute aid fairly does not exist within the CNM.

« Les majors sont les premières bénéficiaires de revenus du streaming, lesquels deriving principally from international artists et des fonds de catalogues, à l’inverse de la nouveauté française, que rapporte peu », rétorque Pascal Nègre, longtemps à la tête d’Universal Music France. “This tax is logical: it is not yet up to the show, which suffers, to finance recorded music while the streaming market is skyrocketing and will double in five years,” he believes.

In view of the most listened to titles, “this contribution would be borne three quarters by the international repertoire, owned by the majors, and the French catalog funds, whose costs have already been amortized”, confirms Guilhem Cottet. , CEO of UPFI. “Some of my members, like Wagram – whose artist Orelsan is a streaming hit – would also be taxed, like the big guys, but they find it virtuous to finance the production of new French releases,” he adds.

21 million potential

In addition, given that subscription music platforms pay 70% of their income to music rights holders each year, this already modest tax would only be calculated on the remaining 30%, which would reduce its impact, its defenders calculate. It is not a sea to drink for some, but a lot for others: on a turnover of 1,400 million euros, this contribution would generate 21 million for the CNM.

Proponents of this tax believe that the consumer has little risk of having their subscription reassessed because the platforms include in their contracts a clause that transfers any new tax to the royalties paid by the record companies. “We only ask for a gesture of mutualization because our economies are interconnected”, insists Aurélien Binder, CEO of Fimalac Entertainment, a show producer and theater operator.

Taxpayer Assistance

In any case, in the event that the show is the only one financed by the CNM, it is not about redistributing aid to recorded music where the concentration around American and Chinese multinationals has increased with the taking over of catalogues. However, with the exception of tax credits, some of which will come to an end, there is no permanent mechanism to support phonographic production.

“The law establishes that the CNM supports music, from writing to broadcasting. If we do not have the means, the transversal missions will suffer, we will not be able to help the links that will not contribute ”, warns the president of the CNM, Jean-Philippe Thiellay.

“However, aid for creation stimulates the investment of VSEs and SMEs and the taking of risks towards less profitable aesthetics, threatened with gradual disappearance: classical, jazz, young French song. Remember that independents do 80% of phono production, while the big ones focus more on distribution and marketing”, Guilhem Cottet worries. “If we can no longer project ourselves in the long term, the diversity and international influence of our artists will be affected,” says Romain Vivien, CEO of Believe France.

However, the context plays in favor of the status quo. Having stated that Bruno Le Maire is opposed to any additional tax, it is unlikely that he will agree to introduce a tax on recorded music. The Minister of Culture, when presenting her budget, wanted to reassure: “There is no issue before 2024 and we must give ourselves time to reflect on a complex reform. »

Data management

The CNM has market studies in its missions: currently they are mostly carried out by the big ones and this is not unanimous. “Making the numbers do the talking is a competitive advantage because the top weekly albums benefit from visibility in the media and on the playlists. Social networks are poorly taken into account, calculation methods change without consultation…”, points out Romain Vivien, from Believe. “It is as if Gaumont and Pathé had access to the data of other players,” says the UPFI. But if the CNM is the legitimate entity to analyze the sector’s statistics, it still has to have the means. SNEP counters that it has been calculating rankings neutrally for decades.

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