Chatting with The Industry Observer for Fear At The Top, APRA AMCOS CEO Dean Ormston provided an explanation on how the company makes money.
Ormston began by clarifying that local collecting society APRA AMCOS is a member-based association set up by songwriters and composers and music publishers.
“We’ve been around since 1926… when radio started in Australia, that’s why we became relevant,” he said.
Dean Ormston said that when music began to be exploited beyond artists’ control, APRA AMCOS took on the role of administering rights “locally and globally.”
“When you write a song and become a member of APRA, you assign your public performance communication to us, and we take over putting licences in place and collecting royalties on your behalf,” he said.
Check out Dean Ormston discussing how APRA AMCOS makes money:
Ormston explained that APRA AMCOS, thanks to partnerships worldwide, is able to provide this service internationally.
“When you’re picked up on UK radio, our affiliate in the UK, PRS, has a licence in place with the radio station. They collect the money, they pay it back to us,” he said.
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Ormston described the way licences are tailored depending on where the music will be played, calling it a “hierarchical” assessment, or the value of the music to the business.
“What a nightclub pays us is a lot more than what a hairdresser would pay us,” he clarified.
Through this system, Ormston estimated the gross money coming into APRA AMCOS would be around the $450 to $500 million mark. After a range of distribution processes, Ormston says APRA’s operating costs tend to sit around the 12 – 14% bracket. Ormston defined the percentage as the “expense to revenue ratio” and said the ratio was prone to fluctuation.
“We’re very transparent to our members as an operation… Quite rightly, we have a lot of people looking at our operation and what we do,” he said.
Due to COVID-19 and the summer bushfires, APRA AMCOS reported an overall downgraded financial year, causing the company to have to look at their operating costs. Ormston revealed that the global pandemic led to APRA AMCOS having to let 50 people go last year.
“We’re not immune to the commercial realities that are happening in the world, and we, similarly, have to scale our operation.”