The collecting arm for U.K. mechanical and performance rights societies MCPS and PRS today reports that combined revenue from broadcasting and digital uses for the first time have out-performed revenue from recorded physical product.

In announcing record-breaking collections of more than over £562 million ($1.1 billion) in 2007, the MCPS-PRS Alliance noted that online royalties of £10 million ($20 million), which grew by 54% since the prior year, are still a small portion of overall revenue.

A 20% increase in royalties from live pop concerts and improved licensing activity among leisure and industrial premises drove the increase in overall public performance revenue.

The 11% decrease in royalties from the worldwide downturn in physical unit sales to £151.8 million ($303.9 million) was mitigated in the United Kingdom, in part, by improvements in licensing other new formats such as pre-loaded USB sticks and musical novelties.

"Much is written about the state of the music industry, but these results show a healthy story about the increased use of music in almost all areas of our business," says Alliance chief executive Steve Porter.

While the number of transasctions processed by the Alliance increased by 40% since the prior year, the cost of collecting and distributing royalties was just over 10% of total revenues.

Overseas territories that generated the highest revenues in the U.K. were the United States, Germany and France.

The Alliance collects performance and mechanical royalties from broadcasters, online service providers, record companies and other businesses that perform music.