The current publishing puzzle started with marked mechanical income declines, though performance and synchronization streams are also under pressure.  Undoubtedly, the macro-economy is playing a significant role, but a decline in mechanicals is also boosting publisher competition for synch licenses across film, television, and online productions.

That means more supply, and coupled with softer advertising budgets, ultimately lower payouts.  “One of the concerns that I have… is whether the advertising market will really rebound, and come back and be able to provide that source of relief from mechanicals,” said Barry Massarsky, president of Massarsky Consulting and a former senior economist at ASCAP, during a panel discussion at Digital Music Forum in New York last week.

This is going to get worse before it gets better, according to Massarsky, but the sogginess could dry after a few years.  After a “steep decline” in 2009, Massarsky is projecting a 5-percent drop in 2010, and a flat 2011.  After that, the executive foresees a 7 percent gain in 2012.

If the numbers are correct, that means publishers and licensing groups face some difficult years, thanks to a “major decay” in pricing among bigger-budget producers.  But on the bright side, Massarsky noted that “full-length feature films are the most stable,” and amongst the various producers, “have been able to resist some of these cost pressures”.

But the plot thickens.  Instead of Benjamins, some of courting nickels and dimes.  The secret jab is coming from smaller licensing shops like Sir Groovy and INgrooves, both represented on the panel.  Instead of orchestrating complicated licensing deals, the latest entrants are specializing in off-the-shelf, smart licensing platforms that eliminate the middle-man and court a growing group of budget producers.  “There is a great exponential increase in the number of video productions,” commented Sir Groovy chairman David Liebowitz.

But this is still a fledgling sector, and despite its lower-dollar, lower-maintenance approach, the pressure on pricing is downward.  “There’s a lot of downward pressure, budgets are decreasing and there’s not as much money out there.  Who knows when the economy will fully bounce back… it affects everything we do,” said David Zierler, executive vice president and general manager of INgrooves.

But some of the smartest shops – big or small – are figuring things out.  Massarsky pointed to a major publisher that managed to beat the odds by upgrading its platforms, pre-clearing licenses to enable quicker deals, and opening up lower-dollar opportunities.  “They dealt with high-volume, low-cost synchs, those works could have sat on the table,” Massarsky noted, though he declined to identify the name of the publisher.

Then, the wildcard comes from those ‘must-have,’ irreplaceable songs, and certainly, upper-end deals that are still happening.  During the latest Super Bowl, a range of different tracks – including those from indie and legacy artists – got played before the largest television audience in history.

Report by publisher Paul Resnikoff in New York.  In full disclosure, Resnikoff carries options in Sir Groovy.

Tags: Business, New York, New York City, Publishing, Super Bowl, Television

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