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MEMBER SURVEY

2013

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2013MerlinMemberSurvey

Merlinconductedaglobalsurveyonananonymous

basislookingatthedigitalrevenuesofitsmembers

whocollec8velyrepresentthemostcommercially

significantbasketofrightsoutsideofthoseheldby

themajorlabels.

Merlinsmembersincludetheworldsmost

successfulindependentlabelsanddistributors,from

35countries.Thesecompaniescomprisearound10%ofthedigitalmarket.

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Howhasyourstreaming/subscrip=onrevenue

changedbetween2011and2012?

v 92.11%ofrespondentssawanincreasein2012ascomparedto2011

v 64.91%sawanincreaseofover50%v

33.33%sawanincreaseofover100%v 0.%sawadecrease

Increasedbyover100% 33.33%

Increasedby75-100% 14.04%

Increasedby50-75% 17.54%

Increasedby25-50% 14.04%

Increasedbylessthan25% 13.16%

RemainedUnchanged 7.02%

Decreased 0.88%

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33.33%

14.04%

17.54%

14.04%

13.16%

7.02%

0.%

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00%

Increasedbyover100%

Increasedby75-100%

Increasedby50-75%

Increasedby25-50%

Increasedbylessthan25%

RemainedUnchanged

Decreased

Howhasyourstreaming/subscrip=onrevenuechangedbetween2011and2012?

%ofrespondents

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Howhasyoura-la-cartedownloadrevenue

changedbetween2011and2012?

v 63.7%ofrespondentssawanincreasein

2012ascomparedto2011

v 21.5%sawanincreaseofover50%v .40%sawanincreaseofover100%v 13.45%sawadecrease

Increasedbyover100% 8.40%

Increasedby75-100% 1.68%

Increasedby50-75% 11.76%

Increasedby25-50% 19.33%

Increasedbylessthan25% 22.69%

RemainedUnchanged 22.69%

Decreased 13.45%

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0.00% 5.00% 10.00% 15.00% 20.00% 25.00%

Increasedbyover100%

Increasedby75-100%

Increasedby50-75%

Increasedby25-50%

Increasedbylessthan25%

RemainedUnchanged

Decreased

Howhasyoura-la-cartedownloadrevenuechangedbetween2011and2012?

%ofrespondents

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Howhasyourtotalbusinessrevenuechanged

between2011and2012

v 73.04%ofrespondentssawanincreasein2012ascomparedto2011

v 20.7%sawanincreaseofover50%v 7.3%sawanincreaseofover100%v 13.04%sawadecrease

Increasedbyover100% 7.83%Increasedby75-100% 2.61%

Increasedby50-75% 10.43%

Increasedby25-50% 25.22%

Increasedbylessthan25% 26.96%

RemainedUnchanged 13.91%

Decreased 13.04%

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0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00%

Increasedbyover100%

Increasedby75-100%

Increasedby50-75%

Increasedby25-50%

Increasedbylessthan25%

RemainedUnchanged

Decreased

Howhasyourtotalbusinessrevenuechangedbetween2011and2012?

%ofrespondents

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StreamingRevenueasPercentageofTotal

DigitalRevenue

Whatpercentageofyourdigitalrevenuedoesstreaming/subscrip8onrepresent?

ForlabelswhereUSAisprimarysourceofdigitalrevenue:- StreamingRevenueislessthan25%ofDigitalRevenue-54%- StreamingRevenueisbetween25-50%ofDigitalRevenues-30%- StreamingRevenueisover50%ofDigitalRevenues-16%ForlabelswhereEuropeisprimarysourceofdigitalrevenue:- StreamingRevenueislessthan25%ofDigitalRevenue-4%- StreamingRevenueisbetween25-50%ofDigitalRevenues-22%- StreamingRevenueisover50%ofDigitalRevenues-30%Acrossallterritories:- StreamingRevenueislessthan25%ofDigitalRevenue-53%- StreamingRevenueisbetween25-50%ofDigitalRevenues-23%- StreamingRevenueisover50%ofDigitalRevenues-24%

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Whatpercentageofyourdigitalrevenuedoes

streaming/subscrip=onrepresent?

0%

10%

20%

30%

40%

50%

60%

Lessthan25% 25-50% over50%

PRIMARYDIGITALREVENUESOURCE

USA

0%

10%

20%

30%

40%

50%

60%

Lessthan25% 25-50% over50%

PRIMARYDIGITALREVENUESOURCE

EUROPE

%ofrespondents %ofrespondents

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GrowthofStreamingServices

MerlinStreamingrevenuemorethandoubledin2012. AllmajorstreamingservicesMerlinisinbusinesswith

haveindividuallyshownsignificantrevenuegrowthin2012.

Merlinexpectstoreceiveover$65minstreamingrevenuesalonein2013fromits17currentpartners.

Itisincreasinglyclearthattheservicesthathaveproperlyunderstoodthevalueofindependentrepertoiretotheircustomersaretheonesthataresucceeding.

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Conclusions

Thestreamingsubscrip8onbusinessisagrowing,andsubstan8al,business. Thisgrowthappearstobeincrementalratherthansubs8tu8onal. Freedomofchoicecreatedbylimitlessshelfspaceandaprolifera8onof

socialmediatastemakerfiltersisleadingfans,nolongerherdedbytheexpensive,8ghtlycontrolledmediachannelsandstorefrontsofphysicalretail,todiscoverandenjoymoremusicthaneverbefore.

Thenatureofthenew-genera8onserviceshasputalotofcontrolbackintothehandsofrightsowners.

Asaresultindependentshaveamoreopenmarketandareperformingfarbe^erinthesubscrip8onspacethantheyhavehistoricallyinthephysicalordownloadspace.

Thisisborneoutbythefigureswehaveseeninoursurvey,aswellasbytheincreasingsuccessindependentsareenjoyinginthemainstreamchartsacrosstheglobe.

Themovefromaunit-basedbusinesstoanaccessbasedbusinessiscrea8nganewmusiceconomy,andanewsetofconsumerswhodontbehavethewayconsumersinthephysicalordownloadmarketsdo.

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