PRS for Music Posts Record Revenues: 'There Are Far More Opportunities to Collaborate Than Compete'
Hit albums and huge-grossing world tours from Ed Sheeran, Roger Waters, U2 and The Rolling Stones helped revenues at U.K. collection society PRS for Music grew 4.4% in 2018.
Royalty revenues for the year totaled £746 million ($965 million), an increase on just over £31 million ($40 million) on a constant currency basis. Of that total, £603 million ($779 million) was paid out to songwriters, composers and music publishers, a slight fall of 0.2% on the previous year, which PRS for Music blamed on processing delays at its joint venture partners.
Driving the overall growth in collections was a 9% rise in international receipts with revenues generated from members' music being playing abroad reaching £280 million ($362 million). Over the last three years, international revenues have grown by more than 40%, reports the London-based organization, representing the rights of over 135,000 songwriters, composers and music publishers in the U.K. and two million worldwide.
Breaking down international collections, the grouping of Europe, Middle-East and Africa generated the lion's share of income, rising by 9% year-on-year to £175 million ($226 million). Revenues from North America totaled £66 million ($85 million), up 4.6% on 2017, with Asia Pacific accounting for £29 million ($37 million), up 3%.
As per previous years, collections from digital services saw the biggest spike, climbing 17% to over £145 million ($187 million) across streaming, video-on-demand, downloads and gaming.
In 2018, PRS for Music signed licensing agreements (via its joint venture pan-European online rights hub ICE) with a number of new digital services including Mixcloud, Facebook and Instagram. Those deals contributed to a 70% increase in the number of music performances processed by PRS and its joint venture partners, which grew to more than 11 trillion last year.
The same period did, however, see a reduction in public performance royalties, made up of license collections from music played in U.K. shops, offices, pubs, clubs, hotels, cinemas and at live concerts. Despite strong growth in live receipts (up nearly 13%), overall public performance revenues fell by 3% to £192 million ($248 million), reflecting the ongoing struggles faced by many British bricks-and-mortar retailers.
Income from U.K. broadcasters was also down on 2017's figure, falling by 5% to 128 million ($164 million). PRS cited a reduction in linear TV viewing and the impact of a one-off payment it received from commercial broadcaster ITV in 2017 as contributing to the reduction.
Following last February's launch of a new joint venture for public performance licensing with PPL, PRS for Music's costs rose by 8.5% to £97 million ($125 million).
Reflecting on the strong year-end figures, PRS for Music CEO Robert Ashcroft identifies the fast-growing digital sector aligned with a long-term strategic approach to growing international collections as key drivers.
"We've found over the last 10 years there are far more opportunities to collaborate than compete," Ashcroft tells Billboard, pointing to PRS' 100-plus representation agreements in place globally.
He describes the first-of-its-kind multi-territory license deal brokered between European online licensing hub ICE (formed by collecting societies PRS, STIM in Sweden and Germany-based GEMA) and Facebook in February 2018 as a key development.
"It was really important to get Facebook over line and become licensed and I have to say they are taking their music value proposition very seriously. We will continue to see them evolve their music strategy," says Ashcroft, who co-authored a highly influential 2014 paper with economist Dr. George Barker entitled, Is Copyright Law Fit For Purpose In The Internet Era?
That paper helped initiate the industry-wide debate over what became known as the value gap, an argument that rumbled on for nearly five years and culminated in the European Parliament passing widespread changes to copyright law earlier this year. Ashcroft calls the EU's ruling "the biggest development in copyright in two decades."
"What the copyright directive has done is clarify the liability [of user-uploaded platforms like YouTube] and opens the door for us to go and license [other] emerging businesses. You can't have some companies taking out a license and others thinking that they don't have to. Dailymotion, Vimeo, Twitter -- the game is up. It's time to get a license," he states.
Online multiplayer gaming is another area that, once fully licensed, could reap huge returns for the music business, he believes. "The audiences there are absolutely enormous," says Ashcroft, who envisages major regulatory changes for tech giants like Google, Apple, Facebook and Amazon in the years ahead.
"We took on the might of the tech platforms with the copyright directive and it will be very interesting to see what happens in the forthcoming U.S. elections," he reflects. "I think there is a growing sense there that the [tech companies] are in a period of monopoly domination that we haven't seen since the oil companies, way back when."
He continues: "Let's face it, it was the U.S. that invented the whole concept of breaking up monopolies. They did with the oil companies. They did it with the telcos. I think it's coming. You cannot carry on the way that things are. It's a threat to democracy and it's a threat to economic growth."
UPDATE: This article was updated to include quotes from an interview with PRS for Music CEO Robert Ashcroft.