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UK Collection Society PRS for Music Posts Record Revenues for 2016
It was yet another up (streaming) and down (digital downloads) year.
For the second consecutive year, U.K. collection society PRS for Music has reported record revenues with royalty income rising 10 percent on a constant currency basis to total £621 million ($794 million).
That resulted in £527 million ($674 million) being paid out to PRS members in 2016, up 11 percent on the previous year and crossing the half billion pound mark for the first time. Driving the growth was rises across all of PRS' four main revenue streams, with international receipts up 5 percent year-on-year to total £233 million ($298 million).
Digital collections saw the largest spike -- almost doubling last year's figure to generate £80 million ($102 million) in income. Public performance revenues experienced more modest growth, climbing by almost 5 percent to £183 million ($234 million). Broadcast collections were stable at £124 million ($158 million).
Breaking down international receipts, Europe remained the biggest source of revenue with collections totaling £137 million ($175 million) -- up 16 percent on the previous year.
Payments from North America amounted to £47 million ($60 million) -- again, up almost 16 percent -- with PRS citing the success of its songwriters and composers in the U.S. coupled with online growth as being key contributors.
Asia Pacific was the third biggest contributor of international revenues -- £26 million ($33 million), up 29 percent year-on-year -- while income from developing and emerging markets arrested 2015's decline, climbing 75 percent to £13.5 million ($17 million).
When it comes to the increase in digital collections, streaming was unsurprisingly the main driver, generating the lion's share of online revenue - £61 million ($78 million), up almost 160 percent on 2015. As a consequence, download receipts fell by almost 10 percent year-on-year to £5.5 million ($7 million). Collections from video-on-demand services also dropped (down 6 percent in real terms), although PRS attributes the fall to settlements it received in 2015 that were not repeated last year.
PRS' annual net costs rose by almost 15 percent to £80 million ($102 million), which the society attributes to currency fluctuations, increased commission costs and continual investment in its services to meet the huge uptake in digital consumption. By way of illustration, the organization saw 4.3 trillion performances of music reported worldwide in 2016 -- a data volume increase of 80 percent. As recently as 2012, the figure stood at 126 billion.
Last year also saw PRS -- which represents the rights of over 125,000 songwriters, composers and music publishers in the U.K. and two million worldwide -- pay out to a higher number of music creators than ever before, up 33 percent on 2015. The number of unique musical works and songs earning money also rose by 45 percent to 4.2 million.
"The record results are the execution of a strategy that we set out six years ago," Robert Ashcroft, PRS for Music CEO tells Billboard. He cites the organization's investment in copyright tracking systems and successful lobbying for a European Union (EU) directive on collective rights management -- passed in 2014 and adopted into U.K. law last year -- as helping to "shape the environment to grow online revenues" and "protect the viability of the market."
"The most important thing in our industry is to secure the future value of the online market and the only way that we can do that is to compete for mandates rather than compete for licenses between collecting societies," says Ashcroft. He calls addressing the value gap -- and tackling safe harbor legislation that services such as YouTube operate under - "the next step in ensuring a healthy developing market."
"Copyright only exists because of the law and we need to make sure that the law reflects both the needs of the customers and the needs of the rights holders," he states. The loaded issue of Brexit and its potential impact on the music business is another pressing concern for the CEO, who says that 11 percent of PRS' employees are from outside the U.K.
"It's really important for us that our people are secure and that they continue to have the right to reside here," warns Ashcroft. "We are a very international business and it's absolutely critical that we don't disrupt that."