- New business models help grow revenues from non-unit sales of music by 7% to £195m
- Record labels now generate 18% of income from outside physical format and digital retail sales
- Bulk of record companies’ income is still via physical and digital unit sales
Record company revenues outside traditional unit sales of music increased by 7% to £195m in 2008, up from £182m
# in 2007, figures released today by UK recorded music business body the BPI revealed. These additional revenues have shown a second consecutive year of growth and now account for 18% of record companies’ domestic income.
These figures, collected for the second year by BPI and released today at its Annual General Meeting, show that new partnerships and a willingness to explore new business models generate significant revenues for UK record labels beyond their traditional retail sales base.
Record companies now generate almost a fifth of their income through more than just retail unit sales, with significant revenue streams now being derived from licensing recordings to third parties and multiple-rights income such as touring and merchandising.
BPI Chief Executive
Geoff Taylor said: “These figures show how the record companies of today are turning into the music companies of tomorrow – investing in talent, partnering with artists and getting music products and services in all their forms to consumers. Although selling CDs and digital downloads remains at the core of record company investment and revenues, licensing of innovative business models is helping new, significant revenue streams flourish.”
The bulk of record companies’ income is still represented by physical and digital unit sales, which generated some £1.3bn in retail revenue in the UK during 2008.
Digital sales continue to show substantial growth, however, with digital formats now accounting for virtually all (97%) of all Top-40 singles sales. Almost 350m single track downloads and around 27m digital albums have now been sold in the UK since the launch of the first mainstream online stores in 2004. Sales of digital albums have grown by 65% year-on-year. In total, digital formats now account for 13.3% of all UK record company sales income.
The most dramatic growth area during 2008 was digital licensing, which includes income from ad-supported models such as Spotify and We7 as well as bundled subscriptions like Comes With Music. Revenues from these new digital business models more than quadrupled in a year to £13.8m in 2008.
Broadcasting and public performance licensing collection from PPL also generated strong income for labels of £78.7m – 40% of the overall licensing total and a solid increase of 7% year-on-year.
Artist-related income continued to provide a substantial revenue stream of £49.9m during 2008. These innovative multiple-rights deals – also dubbed ‘360 degree deals’ – are where record companies add value in other areas of the music business, including merchandising and income from concerts alongside digital products like mobile phone wallpapers.
Synchronisation license income, from the use of music in films, TV, games and advertising, declined slightly from £23.4m in 2007 to £20.7m in 2008, largely as a reflection of broader economic pressures facing the UK advertising industry.
ENDS
NOTES FOR EDITORS
# 2007 reported figure restated to incorporate previously undeclared sources of income.
This report does not include export, i.e. international shipment of physical product, or international licensing deals (e.g. when a CD or download from a UK-signed artist is sold overseas).
Methodology for calculating licensing and multiple rights income
The BPI survey figures are based on returns from the major record companies and weighted according to Official Charts Company market share data in order to provide a representation of the whole market.
In total, licensing and multiple rights income generated £194.8m for labels in 2008. Combined with trade sales income, domestic record label earnings amounted to £1,088.6m in 2008.
Explanation of Terms
Digital Licensing: Comprises income from advertising supported models (such as We7 and Spotify), income from ISPs, income from bundled subscriptions (such as Comes With Music), income from non-bundled subscriptions (such as Napster, Datz) and income from non music retailing internet sites
Synch Licensing: Copyright licensing income received from the use of sound recordings in film, TV, games and advertising.
Public Performance Licensing: Copyright licensing income received by UK record companies from domestic public performance of recordings from PPL and VPL (e.g. blanket BBC licence, commercial radio, commercial TV, video play on MTV, online, public use of music in pubs, clubs, bars, shops etc). The figures supplied in this press release relate to 2008’s distributable income.
Multiple rights income/ ‘360 degree income’: Income received outside direct sales & licensing of recorded music copyrights (e.g. use of artist logos, merchandise, touring, use of music in shows, digital products such as mobile phone wallpaper, artist services, sponsorship deals)
About PPL
PPL is the London-based music licensing company which licenses recorded music on behalf of 3,400 record companies and 39,500 performers in the UK. In addition, the company has 42 bilateral agreements with similar organisations around the world representing a further 3,400 record companies and 29,000 performers.
PPL collects domestic and international revenues from UK television and radio, digital and online media as well as public performance income. The company does not retain any profit for itself. The costs of collecting, processing and distributing the licence fees are taken from the gross revenues that the company collects. Cost-to-revenue ratio has remained at the 2007 levels of 14.6% despite increasing investment in technology.
All these revenues are distributed and paid to PPL's respective record company and performer members. These include featured artists as well as session musicians, ranging from orchestral players to percussionists and to singers. There is no joining fee or administration charge and the company actively seeks members.
PPL’s role and remit increases year on year given the increasing amount of data. For example the company receives details electronically on a weekly basis for, on average, 6,500 new recordings. Once this data has been fed into its own databases, it is then passed on to PRS for Music for it to administer the relevant copying rights on behalf of the songwriters, composers and publishers. PPL also provides that data on to the Official Charts Company for the purpose of the charts, and also to the BPI (The British Recorded Music Industry) and IFPI (International Federation of Phonographic Industry) for anti-piracy purposes. PPL’s other areas of operations include VPL, PPL Repertoire Database and PPL Video Store.
FOR FURTHER INFORMATION
On BPI, please contact Adam Liversage on 0207 803 1326 or e-mail
adam.liversage@bpi.co.uk.
On PPL, please contact Jonathan Morrish on 020 7534 1245 or visit
www.ppluk.com